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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-801
======================================================================
TRIBAL SOCIAL SECURITY FAIRNESS ACT OF 2018
_______
June 29, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 6124]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 6124) to amend title II of the Social Security Act
to authorize voluntary agreements for coverage of Indian tribal
council members, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-801
======================================================================
TRIBAL SOCIAL SECURITY FAIRNESS ACT OF 2018
_______
June 29, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 6124]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 6124) to (1) amend the Social Security Act to allow
Indian tribal governments to enter into agreements with the
Commissioner of Social Security to obtain Social Security and
Medicare coverage with respect to the services of tribal
council leaders and members in their capacity as tribal council
members and (2) amend the Internal Revenue Code of 1986 (IRC)
to provide that such tribal council members covered by an
agreement under the bill are employees for Federal Insurance
Contributions Act (FICA) tax purposes, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND...........................................4
II. EXPLANATION OF THE BILL..........................................6
A. Voluntary Agreements for Coverage of Services by
American Indian Tribal Council Members (sec. 2 of the
bill and sec. 3121 of the Internal Revenue Code of
1986 and new sec. 218A of Title II of the Social
Security Act)........................................ 6
III. VOTES OF THE COMMITTEE...........................................8
IV. BUDGET EFFECTS OF THE BILL.......................................9
A. Committee Estimate of Budgetary Effects............... 9
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority........................ 9
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 9
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
A. Committee Oversight Findings and Recommendations...... 10
B. Statement of General Performance Goals and Objectives. 10
C. Information Relating to Unfunded Mandates............. 10
D. Applicability of House Rule XXI 5(b).................. 10
E. Tax Complexity Analysis............................... 13
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits.............................. 13
G. Duplication of Federal Programs....................... 13
H. Disclosure of Directed Rule Makings................... 13
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........13
A. Text of Existing Law Amended or Repealed by the Bill,
as Reported.......................................... 13
B. Changes in Existing Law Proposed by the Bill, as
Reported............................................. 14
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tribal Social Security Fairness Act of
2018''.
SEC. 2. VOLUNTARY AGREEMENTS FOR COVERAGE OF SERVICES BY AMERICAN
INDIAN TRIBAL COUNCIL MEMBERS.
(a) In General.--Title II of the Social Security Act (42 U.S.C. 401
et seq.) is amended by inserting after section 218 the following new
section:
``voluntary agreements for coverage of indian tribal council members
``Purpose of Agreement
``Sec. 218A. (a)(1) The Commissioner of Social Security shall, at the
request of any Indian tribe, enter into an agreement with such Indian
tribe for the purpose of extending the insurance system established by
this title to services performed by individuals as members of such
Indian tribe's tribal council. Any agreement with an Indian tribe under
this section applies to all members of the tribal council, and shall
include all services performed by individuals in their capacity as
council members.
``(2) Notwithstanding section 210(a), for the purposes of this title,
the term `employment' includes any service included under an agreement
entered into under this section.
``Definitions
``(b) For the purposes of this section:
``(1) The term `member' means, with respect to a tribal
council, an individual appointed or elected to serve as a
member or the head of the tribal council.
``(2) The term `tribal council' means the appointed or
elected governing body of a federally recognized Indian tribe.
``Effective Date of Agreement
``(c)(1) Any agreement under this section shall be effective with
respect to services performed after an effective date specified in such
agreement, provided that such date may not be earlier than the first
day of the next calendar month after the month in which the agreement
is executed by both parties.
``(2) At the request of the Indian tribe at the time of the
agreement, such agreement may apply with respect to services performed
before such effective date for which there were timely paid in good
faith (and not subsequently refunded) to the Secretary of the Treasury
amounts equivalent to the sum of the taxes which would have been
imposed by sections 3101 and 3111 of the Internal Revenue Code of 1986
had such services constituted employment for purposes of chapter 21 of
such Code. No agreement under this section may require payment to be
made after the effective date specified in such agreement of any taxes
with respect to services performed before such effective date.
``Duration of Agreement
``(d) No agreement under this section may be terminated on or after
the effective date of the agreement.''.
(b) Conforming Amendments.--
(1) Social security act.--Section 210(a) of the Social
Security Act (42 U.S.C. 410(a)) is amended--
(A) in paragraph (20), by striking ``or'' at the end;
(B) in paragraph (21), by striking the period at the
end and inserting ``; or''; and
(C) by inserting after paragraph (21) the following
new paragraph:
``(22) Service performed by members of Indian tribal councils
as tribal council members in the employ of an Indian tribal
government, except that this paragraph shall not apply in the
case of service included under an agreement under section
218A.''.
(2) Internal revenue code of 1986.--The Internal Revenue Code
of 1986 is amended--
(A) in section 3121(b)--
(i) in paragraph (20), by striking ``or'' at
the end;
(ii) in paragraph (21), by striking the
period at the end and inserting ``; or''; and
(iii) by inserting after paragraph (21) the
following new paragraph:
``(22) service performed by members of Indian tribal councils
as tribal council members in the employ of an Indian tribal
government, except that this paragraph shall not apply in the
case of service included under an agreement under section 218A
of the Social Security Act.''; and
(B) in section 3121(d)(4), by inserting ``or 218A''
after ``section 218''.
(c) Rule of Construction.--Nothing in this Act or the amendments made
by this Act shall be construed to affect application of any Federal
income tax withholding requirements under the Internal Revenue Code of
1986.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 6124, as reported by the Committee on Ways and Means,
seeks to give tribal council members the ability to elect
Social Security coverage. The bill amends Title II of the
Social Security Act to allow tribal councils to voluntarily
enter into coverage agreements with the Social Security
Administration (SSA). The bill also allows tribal council
members to receive Social Security credit for FICA taxes paid
erroneously, prior to the establishment of the coverage
agreement, if these taxes were paid timely and not subsequently
refunded.
B. Background and Need for Legislation
When Social Security was established, state and local
government employees were excluded from Social Security
coverage due to concerns that the 10th Amendment prohibited the
federal government from requiring states to join Social
Security. The Social Security Amendments of 1950 added Section
218 to the Social Security Act, which allowed state and local
governments to extend Social Security (and later Medicare)
coverage to their employees through a voluntary agreement,
known as a 218 agreement, between the state and the SSA. Under
Section 218, the state/local government may only extend
coverage following a vote by members of the retirement system
through a referendum process. The agreements generally cover
all positions within a coverage group, not just specific
individuals. Once a group is covered, the employer may not
revoke coverage and employees filling the covered positions may
not decline coverage.
The services performed by members of tribal councils are
not covered by Social Security. In 1959, the Internal Revenue
Service (IRS) ruled that services performed by tribal council
members in their role as council members do not constitute
``employment'' for FICA tax purposes, meaning that these
earnings are not subject to Social Security and Medicare taxes.
In the early 2000s, the SSA began receiving inquiries
regarding the Social Security coverage status of tribal council
members, as some members may have been paying Social Security
taxes erroneously and believed their earnings would count
toward future benefits. In 2006, the SSA updated its program
instructions to clarify that tribal council members' earnings
do not count toward Social Security benefits, consistent with
the 1959 revenue ruling. The SSA's instructions state that the
SSA will provide benefit credits for payroll taxes paid
erroneously prior to 2006. However, some tribal council members
may have paid payroll taxes after this date.
In 2015, Representatives David Reichert (R-WA) and Derek
Kilmer (D-WA) exchanged letters with the Acting Commissioner of
Social Security and the Commissioner of the IRS requesting
additional information about the agencies' policies regarding
Social Security coverage for tribal council members. They also
asked whether the SSA had explored extending optional Social
Security coverage to tribal councils through administrative
action. In response, the Acting Commissioner of Social Security
indicated that the SSA does not have statutory authority to
allow tribal council members to opt into Social Security
coverage.
To give tribal council members the same ability to elect
Social Security coverage that state and local government
employees have, H.R. 6124 allows tribal councils to voluntarily
enter 1 into coverage agreements with the SSA. To address any
remaining confusion from the IRS's 1959 revenue ruling and the
SSA's 2006 policy clarification, the bill also allows tribal
council members to receive Social Security credit for FICA
taxes paid erroneously, prior to the establishment of the
coverage agreement, if these taxes were paid timely and not
subsequently refunded.
C. Legislative History
Background
H.R. 6124 was introduced on June 15, 2018 and was referred
to the Committee on Ways and Means. A previous version of this
bill, H.R. 2860, was introduced on June 8, 2017 and referred to
the Committee on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 6124, the
``Tribal Social Security Fairness Act of 2018,'' on June 21,
2018, and ordered the bill, as amended, favorably reported
(with a quorum being present).
Committee hearings
On June 29, 2017, Social Security Subcommittee Chairman Sam
Johnson and Oversight Subcommittee Chairman Vern Buchanan held
a joint hearing entitled ``Complexities and Challenges of
Social Security Coverage and Payroll Tax Compliance for State
and Local Governments.'' The hearing focused on the roles and
responsibilities of the SSA, the IRS, and State Social Security
Administrators in administering Social Security coverage for
state and local governments. The Subcommittees received
testimony from: (i) Marianna LaCanfora, Acting Deputy
Commissioner, Office of Retirement and Disability Policy, SSA;
(ii) Sunita Lough, Commissioner, Tax Exempt and Government
Entities Division, IRS; and (iii) Maryann Motza, Legislative
Committee Chair and Past President, National Conference of
State Social Security Administrators. Members discussed how the
SSA, IRS, and State Social Security Administrators can improve
coordination to ensure proper administration of Section 218
agreements and increase payroll tax compliance. Members also
questioned the lack of Social Security coverage for tribal
council members and discussed H.R. 2860 (an earlier version of
H.R. 6124) with the SSA and IRS witnesses.
II. EXPLANATION OF THE BILL
A. Voluntary Agreements for Coverage of Services by American Indian
Tribal Council Members
(sec. 2 of the bill and sec. 3121 of the Internal Revenue Code of 1986,
as amended and new sec. 218A of Title II of the Social Security Act)
PRESENT LAW
Federal Insurance Contributions Act
Federal Insurance Contributions Act (FICA) taxes on
employers and employees finance the Old-Age, Survivors, and
Disability Insurance (OASDI, also referred to as Social
Security) and Hospital Insurance (HI, also referred to as
Medicare) programs.\1\ The OASDI tax rate is 6.2 percent on
both the employee and employer (for a total rate of 12.4
percent) and applies to employee wages up to the OASDI wage
base ($128,400 for calendar year 2018). The HI tax rate is 1.45
percent on both the employee and the employer (for a total rate
of 2.9 percent) and applies to all wages.\2\
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\1\Sections 3101-3128 of the Internal Revenue Code of 1986, as
amended (IRC). Statutory references herein are to IRC unless otherwise
indicated. The employee portion of the taxes is collected through
withholding by the employer.
\2\The employee portion of the HI tax (not the employer portion) is
increased by an additional tax of 0.9 percent on wages received in
excess of a threshold amount. The threshold amount is $250,000 in the
case of a joint return, $125,000 in the case of a married individual
filing a separate return, and $200,000 in any other case.
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FICA taxes (and coverage under the Social Security and
Medicare programs) generally are mandatory, that is, employers
and employees generally cannot choose whether FICA taxes apply.
However, as discussed below, in the case of State and local
government employees covered by a State or local government
retirement system, a State may enter into an agreement with the
SSA to cover one or more groups of such employees under the
Social Security and Medicare programs. In that case, services
of such employees constitute employment for FICA tax purposes
and their wages are subject to FICA taxes.\3\
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\3\Sec. 3121(b)(7)(E). In addition, under section 3121(b)(7)(F),
State and local government employees who are not covered by a
retirement system are generally subject to FICA taxes. Also, generally
State and local government employees are subject to the Medicare tax
unless an exception applies (for example, section 3121(u)(2)(C)
provides a continuing employment exception with various requirements,
including employment prior to April 1, 1986).
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FICA taxes apply to wages, defined as remuneration for
employment, which in turn is defined as service performed by an
employee.\4\ Remuneration for service performed by an
individual who is not an employee does not constitute wages for
FICA tax purposes and is not subject to FICA taxes. Guidance
issued by the IRS holds that services performed by members of
Indian tribal councils in their capacities as such do not
constitute employment for FICA tax purposes.\5\ As a result,
amounts paid to members of tribal councils for services as
council members are not wages subject to FICA taxes.
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\4\Sec. 3121(a) and (b). Employee is defined in section 3121(d).
\5\Rev. Rul. 59-354, 1959-2 C.B. 24. In 2006, the SSA updated its
program instructions to clarify that earnings of Indian tribal council
members do not count toward Social Security and Medicare benefits.
However, the program instructions include a note stating that earnings
posted for members of Indian tribal councils for tax years prior to
2006 should remain on earnings records and be used in applicable
benefit computations. SSA POMS: RS 01901.700.
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Social Security and Medicare benefits
The OASDI program under the Social Security Act provides
for the payment of benefits (Social Security benefits) to
individuals based on wages earned as an employee and credited
to the employee's earnings record.\6\ Eligibility for Medicare
coverage under the Social Security Act generally is based on
eligibility for Social Security benefits and, thus, on wages
credited to an employee's earnings record.\7\ Similar
definitions of wages and employment apply for benefit purposes
as for FICA tax purposes.\8\ Thus, remuneration for service
performed by an individual who is not an employee does not
constitute wages for purposes of earning credits for Social
Security or Medicare benefits.
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\6\OASDI (Social Security) benefits are provided under Title II of
the Social Security Act (42 U.S.C. secs. 401ff.).
\7\Sec. 226 of the Social Security Act (42 U.S.C. sec. 426).
\8\Secs. 209 and 210 of the Social Security Act (42 U.S.C. secs.
409 and 410).
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Coverage under the Social Security and Medicare programs
generally is mandatory. However, coverage generally does not
apply in the case of State and local government employees
covered by a State or local government retirement system. In
that case, if a referendum process and certain criteria are
met, then at the request of a State, the Commissioner of Social
Security will enter into an agreement with the State with
respect to one or more coverage groups of such employees under
the Social Security and Medicare programs.\9\ Generally, such
an agreement encompasses all positions within such a coverage
group and once covered, the employer may not revoke such
coverage and employees filling such covered positions may not
decline coverage.
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\9\Generally, the State or local government may only extend
coverage following a referendum process in which a vote occurs that
satisfies various conditions, and if the governor of the State, or an
official of the State designated for this purpose, certifies to the
Commissioner of Social Security that such conditions have been met.
Sec. 218 of the Social Security Act (42 U.S.C. sec. 418).
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REASONS FOR CHANGE
The Committee believes that the provision would correct a
longstanding inequity in the Social Security Act that currently
prevents tribal council leaders and members (collectively,
members) from contributing to and accessing Social Security and
Medicare benefits with respect to services performed in their
capacity as members of the tribal council. The bill would amend
the Social Security Act and the IRC to allow tribal governments
to opt into Social Security and Medicare, pay the related FICA
taxes, and receive Social Security and Medicare benefits.
EXPLANATION OF PROVISION
The provision amends the Social Security Act to provide
that, at the request of an Indian tribal government, the
Commissioner of Social Security will enter into an agreement
with the Indian tribe to cover services performed by
individuals as members of the Indian tribe's tribal council
under the Social Security and Medicare programs. Accordingly,
service of a member of a tribal council under such an agreement
constitutes employment. For purposes of the provision, the term
``tribal council'' means the appointed or elected governing
body of a Federally recognized Indian tribe. In addition, the
term ``member'' means, with respect to a tribal council, an
individual who is appointed or elected to serve as a member or
the head of the tribal council.
An agreement with an Indian tribal government under the
provision applies to all members of the tribal council and must
include all services performed by individuals in their capacity
as members of the tribal council. An agreement will be
effective with respect to services performed after an effective
date specified in the agreement, provided that the date may not
be earlier than the first day of the next calendar month after
the month in which the agreement is executed by both parties.
At the request of the Indian tribal government at the time of
the agreement, the agreement may apply with respect to services
performed before the effective date for which there were timely
paid in good faith (and not subsequently refunded) to the
Secretary of the Treasury amounts equivalent to the sum of the
employee and employer Social Security and Medicare taxes (that
is, the FICA taxes) which would have been imposed by the IRC
had such services constituted employment for purposes of the
IRC. No agreement under the provision may require payment to be
made after the effective date of any taxes with respect to
services performed before the effective date. No agreement
under the provision may be terminated on or after the effective
date of the agreement.
The provision also amends the IRC to provide that a tribal
council member covered by an agreement under the provision is
an employee for FICA tax purposes. Therefore, services of a
tribal council member covered by an agreement constitute
employment for FICA tax purposes, and wages of the tribal
council member are subject to FICA taxes.\10\
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\10\Nothing in the provision is to be construed to affect the
application of any Federal income tax withholding requirements.
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EFFECTIVE DATE
The provision is effective on the date of enactment.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 6124, the ``Tribal Social Security
Fairness Act of 2018,'' on June 21, 2018.
The bill, H.R. 6124, as amended, was ordered favorably
reported to the House of Representatives by a voice vote (with
a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 6124, as
reported.
The following presents the estimated Federal fiscal year
budget receipts of the bill, H.R. 6124, as reported:
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
Item ------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018-23 2018-28
--------------------------------------------------------------------------------------------------------------------------------------------------------
H.R. 6124\1\........................................... - - - \2\ 1 1 1 1 1 2 2 2 2 4 13
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.
\1\Estimate contains the following budget effects:
--------------------------------------------------------------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018-23 2018-28
--------------------------------------------------------------------------------------------------------------------------------------------------------
On-budget.............................................. - - - \2\ \2\ \2\ \2\ \2\ \2\ \2\ \2\ \2\ \2\ 1 3
Off-budget............................................. - - - \2\ 1 1 1 1 1 1 1 1 1 3 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
\2\Gain of less than $500,000.
Pursuant to clause 8 of rule XIII of the Rules of the House
of Representatives, the following statement is made by the
Joint Committee on Taxation with respect to the provisions of
the bill amending the Internal Revenue Code of 1986: The gross
budgetary effect (before incorporating macroeconomic effects)
in any fiscal year is less than 0.25 percent of the current
projected gross domestic product of the United States for that
fiscal year; therefore, the bill is not ``major legislation''
for purposes of requiring that the estimate include the
budgetary effects of changes in economic output, employment,
capital stock, and other macroeconomic variables.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the revenue-increasing tax
provision involves no new tax expenditure.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 28, 2018.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 6124, the Tribal
Social Security Fairness Act of 2018.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Noah
Meyerson.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 6124--Tribal Social Security Fairness Act of 2018
Summary: H.R. 6124 would allow Indian tribes to enter into
agreements with the Social Security Administration (SSA) to
provide Social Security and Medicare Hospital Insurance
coverage for members of tribal councils.
CBO and the staff of the Joint Committee on Taxation (JCT)
estimate that enacting H.R. 6124 would increase revenues by $13
million and would increase direct spending by an insignificant
amount over the 2019-2028 period. Because enacting HR. 6124
would affect direct spending and revenues, pay-as-you-go
procedures apply.
CBO estimates that enacting H.R. 6124 would not increase
net direct spending or on-budget deficits by more than $5
billion in any of the four consecutive 10-year periods
beginning in 2029.
CBO and the staff of JCT have not reviewed H.R. 6124 for
intergovernmental or private-sector mandates. Section 4 of the
Unfunded Mandates Reform Act (UMRA) excludes from the
application of that act any legislative provisions that relates
to the old-age, survivors, and disability insurance program
under title II of the Social Security Act (including taxes
imposed by sections 3101(a) and 311(a) of the Internal Revenue
Code of 1986). CBO and the staff of JCT have determined that
H.R. 6124 falls within that exclusion.
Estimated cost to the Federal Government: The estimated
budgetary effects of H.R. 6124 are shown in the following
table. The costs of the legislation fall within budget function
650 (Social Security).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019-2023 2019-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES IN DIRECT SPENDING
Estimated Budget Authority........................... 0 0 * * * * * * * * * * *
Estimated Outlays.................................... 0 0 * * * * * * * * * * *
INCREASES IN REVENUES
Estimated Revenues................................... 0 * 1 1 1 1 1 2 2 2 2 4 13
On-budget........................................ 0 * * * * * * * * * * 1 3
Off-budget....................................... 0 * 1 1 1 1 1 1 1 2 2 3 10
NET DECREASE (-) IN THE DEFICIT
Effect on the Deficit................................ 0 * -1 -1 -1 -1 -1 -2 -2 -2 -2 -4 -13
On-budget........................................ 0 * * * * * * * * * * -1 -3
Off-budget....................................... 0 * -1 -1 -1 -1 -1 -1 -1 -2 -2 -3 -10
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between -$500,000 and $500,000.
Basis of estimate: Under current law, the earnings of
members of tribal councils of federally recognized Indian
tribes are not subject to Social Security or Medicare payroll
taxes under the Federal Insurance Contributions Act (FICA), and
their earnings are not credited toward eligibility for Social
Security or Medicare benefits.
H.R. 6124 would amend the Social Security Act to allow
Indian tribal governments to enter into agreements with SSA to
obtain Social Security and Medicare coverage for tribal council
leaders and members. It also would amend the Internal Revenue
Code to include tribal council members as employees for FICA
tax purposes if they are covered by an agreement under the
bill.
CBO and JCT expect that under the bill, by 2028, less than
a tenth of eligible tribal members would choose to be covered,
and an additional $13 million in payroll tax revenues would be
collected over the 2019-2028 period. Of that amount, $3 million
would consist of on-budget revenues from Medicare taxes and $10
million would be off-budget revenues from Social Security
taxes.
The additional coverage also would result in higher Social
Security and Medicare outlays over the lifetime of the affected
council members, although few of them would become eligible for
Medicare or Social Security by 2028. CBO estimates that such
outlays over the 10-year period would be insignificant.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table. Only on-budget changes to outlays or revenues
are subject to pay-as-you-go procedures.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 6124 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAY AND MEANS ON JUNE 21, 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019-2023 2019-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
Statutory Pay-As-You-Go Effect....................... 0 0 0 0 0 0 0 0 0 0 0 -1 -3
Memorandum:
Changes in Outlays............................... 0 0 0 0 0 0 0 0 0 0 0 0 0
Changes in Revenues.............................. 0 0 0 0 0 0 0 0 0 0 0 1 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 6124 would not increase net direct
spending by more than $2.5 billion or on-budget deficits by
more than $5 billion in any of the four consecutive 10-year
periods beginning in 2029.
Mandates: CBO and the staff of JCT have not reviewed H.R.
6124 for intergovernmental or private-sector mandates. Section
4 of UMRA excludes from the application of that act any
legislative provisions that relates to the old-age, survivors,
and disability insurance program under title II of the Social
Security Act (including taxes imposed by sections 3101(a) and
311(a) of the Internal Revenue Code of 1986). CBO and the staff
of JCT have determined that H.R. 6124 falls within that
exclusion.
Estimate prepared by: Federal Costs: Noah Meyerson; Federal
Revenues: Staff of the Joint Committee on Taxation; Mandates:
Rachel Austin.
Estimate reviewed by: Sheila Dacey, Chief, Income Security
and Education Cost Estimates Unit; Leo Lex, Deputy Assistant
Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated into
the description portions of this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 (``IRS Reform Act'')
requires the staff of the Joint Committee on Taxation (in
consultation with the Internal Revenue Service and the Treasury
Department) to provide a tax complexity analysis. The
complexity analysis is required for all legislation reported by
the Senate Committee on Finance, the House Committee on Ways
and Means, or any committee of conference if the legislation
includes a provision that directly or indirectly amends the
Internal Revenue Code of 1986 and has widespread applicability
to individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Internal Revenue
Code of 1986 and that have ``widespread applicability'' to
individuals or small businesses, within the meaning of the
rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with Sec. 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program, (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139, or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to section 6104 of
title 31, United States Code.
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee advises that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE II--FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS
* * * * * * *
definition of employment
Sec. 210. For the purposes of this title--
Employment
(a) The term ``employment'' means any service performed after
1936 and prior to 1951 which was employment for the purposes of
this title under the law applicable to the period in which such
service was performed, and any service, of whatever nature,
performed after 1950 (A) by an employee for the person
employing him, irrespective of the citizenship or residence of
either, (i) within the United States, or (ii) on or in
connection with an American vessel or American aircraft under a
contract of service which is entered into within the United
States or during the performance of which and while the
employee is employed on the vessel or aircraft it touches at a
port in the United States, if the employee is employed on and
in connection with such vessel or aircraft when outside the
United States, or (B) outside the United States by a citizen or
resident of the United States as an employee (i) of an American
employer (as defined in subsection (e) of this section), or
(ii) of a foreign affiliate (as defined in section 3121(l)(6)
of the Internal Revenue Code of 1986 of an American employer
during any period for which there is in effect an agreement,
entered into pursuant to section 3121(l) of such Code, with
respect to such affiliate, or (C) if it is service, regardless
of where or by whom performed, which is designated as
employment or recognized as equivalent to employment under an
agreement entered into under section 233; except that, in the
case of service performed after 1950, such term shall not
include--
(1) Service performed by foreign agricultural workers
lawfully admitted to the United States from the
Bahamas, Jamaica, and the other British West Indies, or
from any other foreign country or possession thereof,
on a temporary basis to perform agricultural labor;
(2) Domestic service performed in a local college
club, or local chapter of a college fraternity or
sorority, by a student who is enrolled and is regularly
attending classes at a school, college, or university;
(3)(A) Service performed by a child under the age of
18 in the employ of his father or mother;
(B) Service not in the course of the employer's trade
or business, or domestic service in a private home of
the employer, performed by an individual under the age
of 21 in the employ of his father or mother, or
performed by an individual in the employ of his spouse
or son or daughter; except that the provisions of this
subparagraph shall not be applicable to such domestic
service performed by an individual in the employ of his
son or daughter if--
(i) the employer is a surviving spouse or a
divorced individual and has not remarried, or
has a spouse living in the home who has a
mental or physical condition which results in
such spouse's being incapable of caring for a
son, daughter, stepson, or stepdaughter
(referred to in clause (ii)) for at least 4
continuous weeks in the calendar quarter in
which the service is rendered, and
(ii) a son, daughter, stepson, or
stepdaughter of such employer is living in the
home, and
(iii) the son, daughter, stepson, or
stepdaughter (referred to in clause (ii)) has
not attained age 18 or has a mental or physical
condition which requires the personal care and
supervision of an adult for at least 4
continuous weeks in the calendar quarter in
which the service is rendered;
(4) Service performed by an individual on or in
connection with a vessel not an American vessel, or on
or in connection with an aircraft not an American
aircraft, if (A) the individual is employed on and in
connection with such vessel or aircraft when outside
the United States and (B)(i) such individual is not a
citizen of the United States or (ii) the employer is
not an American employer;
(5) Service performed in the employ of the United
States or any instrumentality of the United States, if
such service--
(A) would be excluded from the term
``employment'' for purposes of this title if
the provisions of paragraphs (5) and (6) of
this subsection as in effect in January 1983
had remained in effect, and
(B) is performed by an individual who--
(i) has been continuously performing
service described in subparagraph (A)
since December 31, 1983, and for
purposes of this clause--
(I) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after being separated therefrom
for a period of less than 366
consecutive days, regardless of
whether the period began
before, on, or after December
31, 1983, then such service
shall be considered continuous,
(II) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after being detailed or
transferred to an international
organization as described under
section 3343 of subchapter III
of chapter 33 of title 5,
United States Code, or under
section 3581 of chapter 35 of
such title, then the service
performed for that organization
shall be considered service
described in subparagraph (A),
(III) if an individual
performing service described in
subparagraph (A) is reemployed
or reinstated after being
separated from such service for
the purpose of accepting
employment with the American
Institute of Taiwan as provided
under section 3310 of chapter
48 of title 22, United States
Code, then the service
performed for that Institute
shall be considered service
described in subparagraph (A),
(IV) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after performing service as a
member of a uniformed service
(including, for purposes of
this clause, service in the
National Guard and temporary
service in the Coast Guard
Reserve) and after exercising
restoration or reemployment
rights as provided under
chapter 43 of title 38, United
States Code, then the service
so performed as a member of a
uniformed service shall be
considered service described in
subparagraph (A), and
(V) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after employment (by a tribal
organization) to which section
104(e)(2) of the Indian Self-
Determination Act applies, then
the service performed for that
tribal organization shall be
considered service described in
subparagraph (A); or
(ii) is receiving an annuity from the
Civil Service Retirement and Disability
Fund, or benefits (for service as an
employee) under another retirement
system established by a law of the
United States for employees of the
Federal Government (other than for
members of the uniformed services);
except that this paragraph shall not apply with respect
to any such service performed on or after any date on
which such individual performs--
(C) service performed as the President or
Vice President of the United States,
(D) service performed--
(i) in a position placed in the
Executive Schedule under sections 5312
through 5317 of title 5, United States
Code,
(ii) as a noncareer appointee in the
Senior Executive Service or a noncareer
member of the Senior Foreign Service,
or
(iii) in a position to which the
individual is appointed by the
President (or his designee) or the Vice
President under section 105(a)(1),
106(a)(1), or 107(a)(1) or (b)(1) of
title 3, United States Code, if the
maximum rate of basic pay for such
position is at or above the rate for
level V of the Executive Schedule,
(E) service performed as the Chief Justice of
the United States, an Associate Justice of the
Supreme Court, a judge of a United States court
of appeals, a judge of a United States district
court (including the district court of a
territory), a judge of the United States Claims
Court, a judge of the United States Court of
International Trade, a judge of the United
States Tax Court, a United States magistrate,
or a referee in bankruptcy or United States
bankruptcy judge,
(F) service performed as a Member, Delegate,
or Resident Commissioner of or to the Congress,
(G) any other service in the legislative
branch of the Federal Government if such
service--
(i) is performed by an individual who
was not subject to subchapter III of
chapter 83 of title 5, United States
Code, or to another retirement system
established by a law of the United
States for employees of the Federal
Government (other than for members of
the uniformed services), on December
31, 1983, or
(ii) is performed by an individual
who has, at any time after December 31,
1983, received a lump-sum payment under
section 8342(a) of title 5, United
States Code, or under the corresponding
provision of the law establishing the
other retirement system described in
clause (i), or
(iii) is performed by an individual
after such individual has otherwise
ceased to be subject to subchapter III
of chapter 83 of title 5, United States
Code (without having an application
pending for coverage under such
subchapter), while performing service
in the legislative branch (determined
without regard to the provisions of
subparagraph (B) relating to continuity
of employment), for any period of time
after December 31, 1983,
and for purposes of this subparagraph (G) an
individual is subject to such subchapter III or
to any such other retirement system at any time
only if (a) such individual's pay is subject to
deductions, contributions, or similar payments
(concurrent with the service being performed at
that time) under section 8334(a) of such title
5 or the corresponding provision of the law
establishing such other system, or (in a case
to which section 8332(k)(1) of such title
applies) such individual is making payments of
amounts equivalent to such deductions,
contributions, or similar payments while on
leave without pay, or (b) such individual is
receiving an annuity from the Civil Service
Retirement and Disability Fund, or is receiving
benefits (for service as an employee) under
another retirement system established by a law
of the United States for employees of the
Federal Government (other than for members of
the uniformed services), or
(H) service performed by an individual--
(i) on or after the effective date of
an election by such individual, under
section 301 of the Federal Employees'
Retirement System Act of 1986, section
307 of the Central Intelligence Agency
Retirement Act (50 U.S.C. 2157), or the
Federal Employees' Retirement System
Open Enrollment Act of 1997 to become
subject to the Federal Employees'
Retirement System provided in chapter
84 of title 5, United States Code, or
(ii) on or after the effective date
of an election by such individual,
under regulations issued under section
860 of the Foreign Service Act of 1980,
to become subject to the Foreign
Service Pension System provided in
subchapter II of chapter 8 of title I
of such Act;
(6) Service performed in the employ of the United
States or any instrumentality of the United States if
such service is performed--
(A) in a penal institution of the United
States by an inmate thereof;
(B) by any individual as an employee included
under section 5351(2) of title 5, United States
Code (relating to certain interns, student
nurses, and other student employees of
hospitals of the Federal Government), other
than as a medical or dental intern or a medical
or dental resident in training; or
(C) by any individual as an employee serving
on a temporary basis in case of fire, storm,
earthquake, flood, or other similar emergency;
(7) Service performed in the employ of a State, or
any political subdivision thereof, or any
instrumentality of any one or more of the foregoing
which is wholly owned thereby, except that this
paragraph shall not apply in the case of--
(A) service included under an agreement under
section 218,
(B) service which, under subsection (k),
constitutes covered transportation service,
(C) service in the employ of the Government
of Guam or the Government of American Samoa or
any political subdivision thereof, or of any
instrumentality of any one or more of the
foregoing which is wholly owned thereby,
performed by an officer or employee thereof
(including a member of the legislature of any
such Government or political subdivision), and,
for purposes of this title--
(i) any person whose service as such
an officer or employee is not covered
by a retirement system established by a
law of the United States shall not,
with respect to such service, be
regarded as an officer or employee of
the United States or any agency or
instrumentality thereof, and
(ii) the remuneration for service
described in clause (i) (including fees
paid to a public official) shall be
deemed to have been paid by the
Government of Guam or the Government of
American Samoa or by a political
subdivision thereof or an
instrumentality of any one or more of
the foregoing which is wholly owned
thereby, whichever is appropriate,
(D) service performed in the employ of the
District of Columbia or any instrumentality
which is wholly owned thereby, if such service
is not covered by a retirement system
established by a law of the United States
(other than the Federal Employees Retirement
System provided in chapter 84 of title 5,
United States Code); except that the provisions
of this subparagraph shall not be applicable to
service performed--
(i) in a hospital or penal
institution by a patient or inmate
thereof;
(ii) by any individual as an employee
included under section 5351(2) of title
5, United States Code (relating to
certain interns, student nurses, and
other student employees of hospitals of
the District of Columbia Government),
other than as a medical or dental
intern or as a medical or dental
resident in training;
(iii) by any individual as an
employee serving on a temporary basis
in case of fire, storm, snow,
earthquake, flood, or other similar
emergency; or
(iv) by a member of a board,
committee, or council of the District
of Columbia, paid on a per diem,
meeting, or other fee basis,
(E) service performed in the employ of the
Government of Guam (or any instrumentality
which is wholly owned by such Government) by an
employee properly classified as a temporary or
intermittent employee, if such service is not
covered by a retirement system established by a
law of Guam; except that (i) the provisions of
this subparagraph shall not be applicable to
services performed by an elected official or a
member of the legislature or in a hospital or
penal institution by a patient or inmate
thereof, and (ii) for purposes of this
subparagraph, clauses (i) and (ii) of
subparagraph (C) shall apply, or
(F) service in the employ of a State (other
than the District of Columbia, Guam, or
American Samoa), of any political subdivision
thereof, or of any instrumentality of any one
or more of the foregoing which is wholly owned
thereby, by an individual who is not a member
of a retirement system of such State, political
subdivision, or instrumentality, except that
the provisions of this subparagraph shall not
be applicable to service performed--
(i) by an individual who is employed
to relieve such individual from
unemployment;
(ii) in a hospital, home, or other
institution by a patient or inmate
thereof;
(iii) by any individual as an
employee serving on a temporary basis
in case of fire, storm, snow,
earthquake, flood, or other similar
emergency;
(iv) by an election official or
election worker if the remuneration
paid in a calendar year for such
service is less than $1,000 with
respect to service performed during any
calendar year commencing on or after
January 1, 1995, ending on or before
December 31, 1999, and the adjusted
amount determined under section
218(c)(8)(B) for any calendar year
commencing on or after January 1, 2000,
with respect to service performed
during such calendar year; or
(v) by an employee in a position
compensated solely on a fee basis which
is treated pursuant to section
211(c)(2)(E) as a trade or business for
purposes of inclusion of such fees in
net earnings from self employment;
for purposes of this subparagraph, except as
provided in regulations prescribed by the
Secretary of the Treasury, the term
``retirement system'' has the meaning given
such term by section 218(b)(4).
(8)(A) Service performed by a duly ordained,
commissioned, or licensed minister of a church in the
exercise of his ministry or by a member of a religious
order in the exercise of duties required by such order,
except that this subparagraph shall not apply to
service performed by a member of such an order in the
exercise of such duties, if an election of coverage
under section 3121(r) of the Internal Revenue Code of
1986 is in effect with respect to such order, or with
respect to the autonomous subdivision thereof to which
such member belongs;
(B) Service performed in the employ of a church or
qualified church-controlled organization if such church
or organization has in effect an election under section
3121(w) of the Internal Revenue Code of 1986, other
than service in an unrelated trade or business (within
the meaning of section 513(a) of such Code);
(9) Service performed by an individual as an employee
or employee representative as defined in section 3231
of the Internal Revenue Code of 1986;
(10) Service performed in the employ of--
(A) a school, college, or university, or
(B) an organization described in section
509(a)(3) of the Internal Revenue Code of 1986
if the organization is organized, and at all
times thereafter is operated, exclusively for
the benefit of, to perform the functions of, or
to carry out the purposes of a school, college,
or university and is operated, supervised, or
controlled by or in connection with such
school, college, or university, unless it is a
school, college, or university of a State or a
political subdivision thereof and the services
in its employ performed by a student referred
to in section 218(c)(5) are covered under the
agreement between the Commissioner of Social
Security and such State entered into pursuant
to section 218;
if such service is performed by a student who is
enrolled and regularly attending classes at such
school, college, or university;
(11) Service performed in the employ of a foreign
government (including service as a consular or other
officer or employee or a nondiplomatic representative);
(12) Service performed in the employ of an
instrumentality wholly owned by a foreign government--
(A) If the service is of a character similar
to that performed in foreign countries by
employees of the United States Government or of
an instrumentality thereof; and
(B) If the Secretary of State shall certify
to the Secretary of the Treasury that the
foreign government, with respect to whose
instrumentality and employees thereof exemption
is claimed, grants an equivalent exemption with
respect to similar service performed in the
foreign country by employees of the United
States Government and of instrumentalities
thereof;
(13) Service performed as a student nurse in the
employ of a hospital or a nurses' training school by an
individual who is enrolled and is regularly attending
classes in a nurses' training school chartered or
approved pursuant to State law;
(14)(A) Service performed by an individual under the
age of eighteen in the delivery or distribution of
newspapers or shopping news, not including delivery or
distribution to any point for subsequent delivery or
distribution;
(B) Service performed by an individual in, and at the
time of, the sale of newspapers or magazines to
ultimate consumers, under an arrangement under which
the newspapers or magazines are to be sold by him at a
fixed price, his compensation being based on the
retention of the excess of such price over the amount
at which the newspapers or magazines are charged to
him, whether or not he is guaranteed a minimum amount
of compensation for such service, or is entitled to be
credited with the unsold newspapers or magazines turned
back;
(15) Service performed in the employ of an
international organization entitled to enjoy
privileges, exemptions, and immunities as an
international organization under the International
Organizations Immunities Act (59 Stat. 669), except
service which constitutes ``employment'' under
subsection (r);
(16) Service performed by an individual under an
arrangement with the owner or tenant of land pursuant
to which--
(A) such individual undertakes to produce
agricultural or horticultural commodities
(including livestock, bees, poultry, and fur-
bearing animals and wildlife) on such land,
(B) the agricultural or horticultural
commodities produced by such individual, or the
proceeds therefrom, are to be divided between
such individual and such owner or tenant, and
(C) the amount of such individual's share
depends on the amount of the agricultural or
horticultural commodities produced;
(18) Service performed in Guam by a resident of the
Republic of the Philippines while in Guam on a
temporary basis as a nonimmigrant alien admitted to
Guam pursuant to section 101(a)(15)(H)(ii) of the
Immigration and Nationality Act (8 U.S.C.
1101(a)(15)(H)(ii));
(19) Service which is performed by a nonresident
alien individual for the period he is temporarily
present in the United States as a nonimmigrant under
subparagraph (F), (J), (M), or (Q) of section
101(a)(15) of the Immigration and Nationality Act, as
amended, and which is performed to carry out the
purpose specified in subparagraph (F), (J), (M), or (Q)
as the case may be;
(20) Service (other than service described in
paragraph (3)(A)) performed by an individual on a boat
engaged in catching fish or other forms of aquatic
animal life under an arrangement with the owner or
operator of such boat pursuant to which--
(A) such individual does not receive any
additional compensation other than as provided
in subparagraph (B) and other than case
remuneration--
(i) which does not exceed $100 per
trip;
(ii) which is contingent on a minimum
catch; and
(iii) which is paid solely for
additional duties (such as mate,
engineer, or cook) for which additional
cash remuneration is traditional in the
industry,
(B) such individual receives a share of the
boat's (or the boats' in the case of a fishing
operation involving more than one boat) catch
of fish or other forms of aquatic animal life
or a share of the proceeds from the sale of
such catch, and
(C) the amount of such individual's share
depends on the amount of the boat's (or boats'
in the case of a fishing operation involving
more than one boat) catch of fish or other
forms of aquatic animal life,
but only if the operating crew of such boat (or each
boat from which the individual receives a share in the
case of a fishing operation involving more than one
boat) is normally made up of fewer than 10 individuals;
[or]
(21) Domestic service in a private home of the
employer which--
(A) is performed in any year by an individual
under the age of 18 during any portion of such
year; and
(B) is not the principal occupation of such
employee[.]; or
(22) Service performed by members of Indian tribal
councils as tribal council members in the employ of an
Indian tribal government, except that this paragraph
shall not apply in the case of service included under
an agreement under section 218A.
For purposes of paragraph (20), the operating crew of a
boat shall be treated as normally made up of fewer than
10 individuals if the average size of the operating
crew on trips made during the preceding 4 calendar
quarters consisted of fewer than 10 individuals.
Included and Excluded Service
(b) If the services performed during one-half or more of any
pay period by an employee for the person employing him
constitute employment, all the services of such employee for
such period shall be deemed to be employment; but if the
services performed during more than one-half of any such pay
period by an employee for the person employing him do not
constitute employment, then none of the services of such
employee for such period shall be deemed to be employment. As
used in this subsection, the term ``pay period'' means a period
(of not more than thirty-one consecutive days) for which a
payment of remuneration is ordinarily made to the employee by
the person employing him. This subsection shall not be
applicable with respect to services performed in a pay period
by an employee for the person employing him, where any of such
service is excepted by paragraph (9) of subsection (a).
American Vessel
(c) The term ``American vessel'' means any vessel documented
or numbered under the laws of the United States; and includes
any vessel which is neither documented or numbered under the
laws of the United States nor documented under the laws of any
foreign country, if its crew is employed solely by one or more
citizens or residents of the United States or corporations
organized under the laws of the United States or of any State.
American Aircraft
(d) The term ``American aircraft'' means an aircraft
registered under the laws of the United States.
American Employer
(e)(1) The term ``American employer'' means an employer which
is (A) the United States or any instrumentality thereof, (B) a
State or any political subdivision thereof, or any
instrumentality of any one or more of the foregoing, (C) an
individual who is a resident of the United States, (D) a
partnership, if two-thirds or more of the partners are
residents of the United States, (E) a trust, if all of the
trustees are residents of the United States, or (F) a
corporation organized under the laws of the United States or of
any State.
(2)(A) If any employee of a foreign person is performing
services in connection with a contract between the United
States Government (or any instrumentality thereof) and any
member of any domestically controlled group of entities which
includes such foreign person, such foreign person shall be
treated as an American employer with respect to such services
performed by such employee.
(B) For purposes of this paragraph--
(i) The term ``domestically controlled group of
entities'' means a controlled group of entities the
common parent of which is a domestic corporation.
(ii) The term ``controlled group of entities'' means
a controlled group of corporations as defined in
section 1563(a)(1) of the Internal Revenue Code of
1986, except that--
(I) ``more than 50 percent'' shall be
substituted for ``at least 80 percent'' each
place it appears therein, and
(II) the determination shall be made without
regard to subsections (a)(4) and (b)(2) of
section 1563 of such Code.
A partnership or any other entity (other than a
corporation) shall be treated as a member of a
controlled group of entities if such entity is
controlled (within the meaning of section 954(d)(3) of
such Code) by members of such group (including any
entity treated as a member of such group by reason of
this sentence).
(C) Subparagraph (A) shall not apply to any services to which
paragraph (1) of section 3121(z) of the Internal Revenue Code
of 1986 does not apply by reason of paragraph (4) of such
section.
Agricultural Labor
(f) The term ``agricultural labor'' includes all service
performed--
(1) On a farm, in the employ of any person, in
connection with cultivating the soil, or in connection
with raising or harvesting any agricultural or
horticultural commodity, including the raising,
shearing, feeding, caring for, training, and management
of livestock, bees, poultry, and fur-bearing animals
and wildlife.
(2) In the employ of the owner or tenant or other
operator of a farm, in connection with the operation,
management, conservation, improvement, or maintenance
of such farm and its tools and equipment, or in
salvaging timber or clearing land of brush and other
debris left by a hurricane, if the major part of such
service is performed on a farm.
(3) In connection with the production or harvesting
of any commodity defined as an agricultural commodity
in section 15(g) of the Agricultural Marketing Act, as
amended, or in connection with the ginning of cotton,
or in connection with the operation or maintenance of
ditches, canals, reservoirs, or waterways, not owned or
operated for profit, used exclusively for supplying and
storing water for farming purposes.
(4)(A) In the employ of the operator of a farm in
handling, planting, drying, packing, packaging,
processing, freezing, grading, storing, or delivering
to storage or to market or to a carrier for
transportation to market, in its unmanufactured state,
any agricultural or horticultural commodity; but only
if such operator produced more than one-half of the
commodity with respect to which such service is
performed.
(B) In the employ of a group of operators of farms
(other than a cooperative organization) in the
performance of service described in subparagraph (A),
but only if such operators produced all of the
commodity with respect to which such service is
performed. For the purposes of this subparagraph, any
unincorporated group of operators shall be deemed a
cooperative organization if the number of operators
comprising such group is more than twenty at any time
during the calendar year in which such service is
performed.
(5) On a farm operated for profit if such service is
not in the course of the employer's trade or business.
The provisions of subparagraphs (A) and (B) of paragraph (4)
shall not be deemed to be applicable with respect to service
performed in connection with commercial canning or commercial
freezing or in connection with any agricultural or
horticultural commodity after its delivery to a terminal market
for distribution for consumption.
Farm
(g) The term ``farm'' includes stock, dairy, poultry, fruit,
fur-bearing animal, and truck farms, plantations, ranches,
nurseries, ranges, greenhouses or other similar structures used
primarily for the raising of agricultural or horticultural
commodities, and orchards.
State
(h) The term ``State'' includes the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and
American Samoa.
United States
(i) The term ``United States'' when used in a geographical
sense means the States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and
American Samoa.
Employee
(j) The term ``employee'' means--
(1) any officer of a corporation; or
(2) any individual who, under the usual common law
rules applicable in determining the employer-employee
relationship, has the status of an employee; or
(3) any individual (other than an individual who is
an employee under paragraph (1) or (2) of this
subsection) who performs services for remuneration for
any person--
(A) as an agent-driver or commission-driver
engaged in distributing meat products,
vegetable products, fruit products, bakery
products, beverages (other than milk), or
laundry or dry-cleaning services, for his
principal;
(B) as a full-time life insurance salesman;
(C) as a home worker performing work,
according to specifications furnished by the
person for whom the services are performed, on
materials or goods furnished by such person
which are required to be returned to such
person or a person designated by him; or
(D) as a traveling or city salesman, other
than as an agent-driver or commission-driver,
engaged upon a full-time basis in the
solicitation on behalf of, and the transmission
to, his principal (except for side-line sales
activities on behalf of some other person) of
orders from wholesalers, retailers,
contractors, or operators of hotels,
restaurants, or other similar establishments
for merchandise for resale or supplies for use
in their business operations;
if the contract of service contemplates that
substantially all of such services are to be performed
personally by such individual; except that an
individual shall not be included in the term
``employee'' under the provisions of this paragraph if
such individual has a substantial investment in
facilities used in connection with the performance of
such services (other than in facilities for
transportation), or if the services are in the nature
of a single transaction not part of a continuing
relationship with the person for whom the services are
performed.
Covered Transportation Service
(k)(1) Except as provided in paragraph (2), all service
performed in the employ of a State or political subdivision in
connection with its operation of a public transportation system
shall constitute covered transportation service if any part of
the transportation system was acquired from private ownership
after 1936 and prior to 1951.
(2) Service performed in the employ of a State or political
subdivision in connection with the operation of its public
transportation system shall not constitute covered
transportation service if--
(A) any part of the transportation system was
acquired from private ownership after 1936 and prior to
1951, and substantially all service in connection with
the operation of the transportation system is, on
December 31, 1950, covered under a general retirement
system providing benefits which, by reason of a
provision of the State constitution dealing
specifically with retirement systems of the State or
political subdivisions thereof, cannot be diminished or
impaired; or
(B) no part of the transportation system operated by
the State or political subdivision on December 31,
1950, was acquired from private ownership after 1936
and prior to 1951;
except that if such State or political subdivision makes an
acquisition after 1950 from private ownership of any part of
its transportation system, then, in the case of any employee
who--
(C) became an employee of such State or political
subdivision in connection with and at the time of its
acquisition after 1950 of such part, and
(D) prior to such acquisition rendered service in
employment in connection with the operation of such
part of the transportation system acquired by the State
or political subdivision,
the service of such employee in connection with the operation
of the transportation system shall constitute covered
transportation service, commencing with the first day of the
third calendar quarter following the calendar quarter in which
the acquisition of such part took place, unless on such first
day such service of such employee is covered by a general
retirement system which does not, with respect to such
employee, contain special provisions applicable only to
employees described in subparagraph (C).
(3) All service performed in the employ of a State or
political subdivision thereof in connection with its operation
of a public transportation system shall constitute covered
transportation service if the transportation system was not
operated by the State or political subdivision prior to 1951
and, at the time of its first acquisition (after 1950) from
private ownership of any part of its transportation system, the
State or political subdivision did not have a general
retirement system covering substantially all service performed
in connection with the operation of the transportation system.
(4) For the purposes of this subsection--
(A) The term ``general retirement system'' means any
pension, annuity, retirement, or similar fund or system
established by a State or by a political subdivision
thereof for employees of the State, political
subdivision, or both; but such term shall not include
such a fund or system which covers only service
performed in positions connected with the operation of
its public transportation system.
(B) A transportation system or a part thereof shall
be considered to have been acquired by a State or
political subdivision from private ownership if prior
to the acquisition service performed by employees in
connection with the operation of the system or part
thereof acquired constituted employment under this
title, and some of such employees became employees of
the State or political subdivision in connection with
and at the time of such acquisition.
(C) The term ``political subdivision'' includes an
instrumentality of (i) a State, (ii) one or more
political subdivisions of a State, or (iii) a State and
one or more of its political subdivisions.
Service in the Uniformed Services
(l)(1) Except as provided in paragraph (4), the term
``employment'' shall, notwithstanding the provisions of
subsection (a) of this section, include--
(A) service performed after December 1956 by an
individual as a member of a uniformed service on active
duty, but such term shall not include any such service
which is performed while on leave without pay, and
(B) service performed after December 1987 by an
individual as a member of a uniformed service on
inactive duty training.
(2) The term ``active duty'' means ``active duty'' as
described in paragraph (21) of section 101 of title 38, United
States Code, except that it shall also include ``active duty
for training'' as described in paragraph (22) of such section.
(3) The term ``inactive duty training'' means ``inactive duty
training'' as described in paragraph (23) of such section 101.
(4)(A) Paragraph (1) of this subsection shall not apply in
the case of any service, performed by an individual as a member
of a uniformed service, which is creditable under section 3(i)
of the Railroad Retirement Act of 1974. The Railroad Retirement
Board shall notify the Commissioner of Social Security, with
respect to all such service which is so creditable.
(B) In any case where benefits under this title are already
payable on the basis of such individual's wages and self-
employment income at the time such notification (with respect
to such individual) is received by the Commissioner of Social
Security, the Commissioner of Social Security shall certify no
further benefits for payment under this title on the basis of
such individual's wages and self-employment income, or shall
recompute the amount of any further benefits payable on the
basis of such wages and self-employment income, as may be
required as a consequence of subparagraph (A) of this
paragraph. No payment of a benefit to any person on the basis
of such individual's wages and self-employment income,
certified by the Commissioner of Social Security prior to the
end of the month in which the Commissioner receives such
notification from the Railroad Retirement Board, shall be
deemed by reason of this subparagraph to have been an erroneous
payment or a payment to which such person was not entitled. The
Commissioner of Social Security shall, as soon as possible
after the receipt of such notification from the Railroad
Retirement Board, advise such Board whether or not any such
benefit will be reduced or terminated by reason of subparagraph
(A), and if any such benefit will be so reduced or terminated,
specify the first month with respect to which such reduction or
termination will be effective.
Member of a Uniformed Service
(m) The term ``member of a uniformed service'' means any
person appointed, enlisted, or inducted in a component of the
Army, Navy, Air Force, Marine Corps, or Coast Guard (including
a reserve component as defined in section 101(27) of title 38,
United States Code), or in one of those services without
specification of component, or as a commissioned officer of the
Coast and Geodetic Survey, the National Oceanic and Atmospheric
Administration Corps, or the Regular or Reserve Corps of the
Public Health Service, and any person serving in the Army or
Air Force under call or conscription. The term includes--
(1) a retired member of any of those services;
(2) a member of the Fleet Reserve or Fleet Marine
Corps Reserve;
(3) a cadet at the United States Military Academy, a
midshipman at the United States Naval Academy, and a
cadet at the United States Coast Guard Academy or
United States Air Force Academy;
(4) a member of the Reserve Officers' Training Corps,
the Naval Reserve Officers' Training Corps, or the Air
Force Reserve Officers' Training Corps, when ordered to
annual training duty for fourteen days or more, and
while performing authorized travel to and from that
duty; and
(5) any person while en route to or from, or at, a
place for final acceptance or for entry upon active
duty in the military, naval, or air service--
(A) who has been provisionally accepted for
such duty; or
(B) who, under the Military Selective Service
Act, has been selected for active military,
naval, or air service;
and has been ordered or directed to proceed to such
place.
The term does not include a temporary member of the Coast Guard
Reserve.
Crew Leader
(n) The term ``crew leader'' means an individual who
furnishes individuals to perform agricultural labor for another
person, if such individual pays (either on his own behalf or on
behalf of such person) the individuals so furnished by him for
the agricultural labor performed by them and if such individual
has not entered into a written agreement with such person
whereby such individual has been designated as an employee of
such person; and such individuals furnished by the crew leader
to perform agricultural labor for another person shall be
deemed to be the employees of such crew leader. A crew leader
shall, with respect to services performed in furnishing
individuals to perform agricultural labor for another person
and service performed as a member of the crew, be deemed not to
be an employee of such other person.
Peace Corps Volunteer Service
(o) The term ``employment'' shall, notwithstanding the
provisions of subsection (a), include service performed by an
individual as a volunteer or volunteer leader within the
meaning of the Peace Corps Act.
Medicare Qualified Government Employment
(p)(1) For purposes of sections 226 and 226A, the term
``medicare qualified government employment'' means any service
which would constitute ``employment'' as defined in subsection
(a) of this section but for the application of the provisions
of--
(A) subsection (a)(5), or
(B) subsection (a)(7), except as provided in
paragraphs (2) and (3).
(2) Service shall not be treated as employment by reason of
paragraph (1)(B) if the service is performed--
(A) by an individual who is employed by a State or
political subdivision thereof to relieve him from
unemployment,
(B) in a hospital, home, or other institution by a
patient or inmate thereof as an employee of a State or
political subdivision thereof or of the District of
Columbia,
(C) by an individual, as an employee of a State or
political subdivision thereof or of the District of
Columbia, serving on a temporary basis in case of fire,
storm, snow, earthquake, flood or other similar
emergency,
(D) by any individual as an employee included under
section 5351(2) of title 5, United States Code
(relating to certain interns, student nurses, and other
student employees of hospitals of the District of
Columbia Government), other than as a medical or dental
intern or a medical or dental resident in training, or
(E) by an election official or election worker if the
remuneration paid in a calendar year for such service
is less than $1,000 with respect to service performed
during any calendar year commencing on or after January
1, 1995, ending on or before December 31, 1999, and the
adjusted amount determined under section 218(c)(8)(B)
for any calendar year commencing on or after January 1,
2000, with respect to service performed during such
calendar year.
As used in this paragraph, the terms ``State'' and ``political
subdivision'' have the meanings given those terms in section
218(b).
(3) Service performed for an employer shall not be treated as
employment by reason of paragraph (1)(B) if--
(A) such service would be excluded from the term
``employment'' for purposes of this section if
paragraph (1)(B) did not apply;
(B) such service is performed by an individual--
(i) who was performing substantial and
regular service for remuneration for that
employer before April 1, 1986,
(ii) who is a bona fide employee of that
employer on March 31, 1986, and
(iii) whose employment relationship with that
employer was not entered into for purposes of
meeting the requirements of this subparagraph;
and
(C) the employment relationship with that employer
has not been terminated after March 31, 1986.
(4) For purposes of paragraph (3), under regulations
(consistent with regulations established under section
3121(u)(2)(D) of the Internal Revenue Code of 1954)--
(A) all agencies and instrumentalities of a State (as
defined in section 218(b)) or of the District of
Columbia shall be treated as a single employer, and
(B) all agencies and instrumentalities of a political
subdivision of a State (as so defined) shall be treated
as a single employer and shall not be treated as
described in subparagraph (A).
Treatment of Real Estate Agents and Direct Sellers
(q) Notwithstanding any other provision of this title, the
rules of section 3508 of the Internal Revenue Code of 1986
shall apply for purposes of this title.
Service in the Employ of International Organizations by Certain
Transferred Federal Employees
(r)(1) For purposes of this title, service performed in the
employ of an international organization by an individual
pursuant to a transfer of such individual to such international
organization pursuant to section 3582 of title 5, United States
Code, shall constitute ``employment'' if--
(A) immediately before such transfer, such individual
performed service with a Federal agency which
constituted ``employment'' as defined in subsection
(a), and
(B) such individual would be entitled, upon
separation from such international organization and
proper application, to reemployment with such Federal
agency under such section 3582.
(2) For purposes of this subsection:
(A) The term ``Federal agency'' means an agency, as
defined in section 3581(1) of title 5, United States
Code.
(B) The term ``international organization'' has the
meaning provided such term by section 3581(3) of title
5, United States Code.
* * * * * * *
VOLUNTARY AGREEMENTS FOR COVERAGE OF INDIAN TRIBAL COUNCIL MEMBERS
Purpose of agreement
Sec. 218A. (a)(1) The Commissioner of Social Security shall,
at the request of any Indian tribe, enter into an agreement
with such Indian tribe for the purpose of extending the
insurance system established by this title to services
performed by individuals as members of such Indian tribe's
tribal council. Any agreement with an Indian tribe under this
section applies to all members of the tribal council, and shall
include all services performed by individuals in their capacity
as council members.
(2) Notwithstanding section 210(a), for the purposes of this
title, the term ``employment'' includes any service included
under an agreement entered into under this section.
Definitions
(b) For the purposes of this section:
(1) The term ``member'' means, with respect to a
tribal council, an individual appointed or elected to
serve as a member or the head of the tribal council.
(2) The term ``tribal council'' means the appointed
or elected governing body of a federally recognized
Indian tribe.
Effective date of agreement
(c)(1) Any agreement under this section shall be effective
with respect to services performed after an effective date
specified in such agreement, provided that such date may not be
earlier than the first day of the next calendar month after the
month in which the agreement is executed by both parties.
(2) At the request of the Indian tribe at the time of the
agreement, such agreement may apply with respect to services
performed before such effective date for which there were
timely paid in good faith (and not subsequently refunded) to
the Secretary of the Treasury amounts equivalent to the sum of
the taxes which would have been imposed by sections 3101 and
3111 of the Internal Revenue Code of 1986 had such services
constituted employment for purposes of chapter 21 of such Code.
No agreement under this section may require payment to be made
after the effective date specified in such agreement of any
taxes with respect to services performed before such effective
date.
Duration of agreement
(d) No agreement under this section may be terminated on or
after the effective date of the agreement.
* * * * * * *
----------
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle C--Employment Taxes
* * * * * * *
CHAPTER 21--FEDERAL INSURANCE CONTRIBUTIONS ACT
* * * * * * *
Subchapter C--General Provisions
SEC. 3121. DEFINITIONS.
(a) Wages.--For purposes of this chapter, the term ``wages''
means all remuneration for employment, including the cash value
of all remuneration (including benefits) paid in any medium
other than cash; except that such term shall not include--
(1) in the case of the taxes imposed by sections
3101(a) and 3111(a) that part of the remuneration
which, after remuneration (other than remuneration
referred to in the succeeding paragraphs of this
subsection) equal to the contribution and benefit base
(as determined under section 230 of the Social Security
Act) with respect to employment has been paid to an
individual by an employer during the calendar year with
respect to which such contribution and benefit base is
effective, is paid to such individual by such employer
during such calendar year. If an employer (hereinafter
referred to as successor employer) during any calendar
year acquires substantially all the property used in a
trade or business of another employer (hereinafter
referred to as a predecessor), or used in a separate
unit of a trade or business of a predecessor, and
immediately after the acquisition employs in his trade
or business an individual who immediately prior to the
acquisition was employed in the trade or business of
such predecessor, then, for the purpose of determining
whether the successor employer has paid remuneration
(other than remuneration referred to in the succeeding
paragraphs of this subsection) with respect to
employment equal to the contribution and benefit base
(as determined under section 230 of the Social Security
Act) to such individual during such calendar year, any
remuneration (other than remuneration referred to in
the succeeding paragraphs of this subsection) with
respect to employment paid (or considered under this
paragraph as having been paid) to such individual by
such predecessor during such calendar year and prior to
such acquisition shall be considered as having been
paid by such successor employer;
(2) the amount of any payment (including any amount
paid by an employer for insurance or annuities, or into
a fund, to provide for any such payment) made to, or on
behalf of, an employee or any of his dependents under a
plan or system established by an employer which makes
provision for his employees generally (or for his
employees generally and their dependents) or for a
class or classes of his employees (or for a class or
classes of his employees and their dependents), on
account of--
(A) sickness or accident disability (but, in
the case of payments made to an employee or any
of his dependents, this subparagraph shall
exclude from the term ``wages'' only payments
which are received under a workman's
compensation law), or
(B) medical or hospitalization expenses in
connection with sickness or accident
disability, or
(C) death, except that this paragraph does
not apply to a payment for group-term life
insurance to the extent that such payment is
includible in the gross income of the employee;
(4) any payment on account of sickness or accident
disability, or medical or hospitalization expenses in
connection with sickness or accident disability, made
by an employer to, or on behalf of, an employee after
the expiration of 6 calendar months following the last
calendar month in which the employee worked for such
employer;
(5) any payment made to, or on behalf of, an employee
or his beneficiary--
(A) from or to a trust described in section
401(a) which is exempt from tax under section
501(a) at the time of such payment unless such
payment is made to an employee of the trust as
remuneration for services rendered as such
employee and not as a beneficiary of the trust,
(B) under or to an annuity plan which, at the
time of such payment, is a plan described in
section 403(a),
(C) under a simplified employee pension (as
defined in section 408(k)(1)), other than any
contributions described in section 408(k)(6),
(D) under or to an annuity contract described
in section 403(b), other than a payment for the
purchase of such contract which is made by
reason of a salary reduction agreement (whether
evidenced by a written instrument or
otherwise),
(E) under or to an exempt governmental
deferred compensation plan (as defined in
subsection (v)(3)),
(F) to supplement pension benefits under a
plan or trust described in any of the foregoing
provisions of this paragraph to take into
account some portion or all of the increase in
the cost of living (as determined by the
Secretary of Labor) since retirement but only
if such supplemental payments are under a plan
which is treated as a welfare plan under
section 3(2)(B)(ii) of the Employee Retirement
Income Security Act of 1974,
(G) under a cafeteria plan (within the
meaning of section 125) if such payment would
not be treated as wages without regard to such
plan and it is reasonable to believe that (if
section 125 applied for purposes of this
section) section 125 would not treat any wages
as constructively received,
(H) under an arrangement to which section
408(p) applies, other than any elective
contributions under paragraph (2)(A)(i)
thereof, or
(I) under a plan described in section
457(e)(11)(A)(ii) and maintained by an eligible
employer (as defined in section 457(e)(1));
(6) the payment by an employer (without deduction
from the remuneration of the employee)--
(A) of the tax imposed upon an employee under
section 3101, or
(B) of any payment required from an employee
under a State unemployment compensation law,
with respect to remuneration paid to an employee for
domestic service in a private home of the employer or
for agricultural labor;
(7)(A) remuneration paid in any medium other than
cash to an employee for service not in the course of
the employer's trade or business or for domestic
service in a private home of the employer;
(B) cash remuneration paid by an employer in
any calendar year to an employee for domestic
service in a private home of the employer
(including domestic service on a farm operated
for profit), if the cash remuneration paid in
such year by the employer to the employee for
such service is less than the applicable dollar
threshold (as defined in subsection (x)) for
such year;
(C) cash remuneration paid by an employer in
any calendar year to an employee for service
not in the course of the employer's trade or
business, if the cash remuneration paid in such
year by the employer to the employee for such
service is less than $100. As used in this
subparagraph, the term ``service not in the
course of the employer's trade or business''
does not include domestic service in a private
home of the employer and does not include
service described in subsection (g)(5);
(8)(A) remuneration paid in any medium other than
cash for agricultural labor;
(B) cash remuneration paid by an employer in
any calendar year to an employee for
agricultural labor unless--
(i) the cash remuneration paid in
such year by the employer to the
employee for such labor is $150 or
more, or
(ii) the employer's expenditures for
agricultural labor in such year equal
or exceed $2,500,
except that clause (ii) shall not apply in
determining whether remuneration paid to an
employee constitutes ``wages'' under this
section if such employee (I) is employed as a
hand harvest laborer and is paid on a piece
rate basis in an operation which has been, and
is customarily and generally recognized as
having been, paid on a piece rate basis in the
region of employment, (II) commutes daily from
his permanent residence to the farm on which he
is so employed, and (III) has been employed in
agriculture less than 13 weeks during the
preceding calendar year;
(10) remuneration paid by an employer in any calendar
year to an employee for service described in subsection
(d)(3)(C) (relating to home workers), if the cash
remuneration paid in such year by the employer to the
employee for such service is less than $100;
(11) remuneration paid to or on behalf of an employee
if (and to the extent that) at the time of the payment
of such remuneration it is reasonable to believe that a
corresponding deduction is allowable under section 217
(determined without regard to section 274(n));
(12)(A) tips paid in any medium other than cash;
(B) cash tips received by an employee in any
calendar month in the course of his employment
by an employer unless the amount of such cash
tips is $20 or more;
(13) any payment or series of payments by an employer
to an employee or any of his dependents which is paid--
(A) upon or after the termination of an
employee's employment relationship because of
(i) death, or (ii) retirement for disability,
and
(B) under a plan established by the employer
which makes provision for his employees
generally or a class or classes of his
employees (or for such employees or class or
classes of employees and their dependents),
other than any such payment or series of payments which
would have been paid if the employee's employment
relationship had not been so terminated;
(14) any payment made by an employer to a survivor or
the estate of a former employee after the calendar year
in which such employee died;
(15) any payment made by an employer to an employee,
if at the time such payment is made such employee is
entitled to disability insurance benefits under section
223(a) of the Social Security Act and such entitlement
commenced prior to the calendar year in which such
payment is made, and if such employee did not perform
any services for such employer during the period for
which such payment is made;
(16) remuneration paid by an organization exempt from
income tax under section 501(a) (other than an
organization described in section 401(a)) or under
section 521 in any calendar year to an employee for
service rendered in the employ of such organization, if
the remuneration paid in such year by the organization
to the employee for such service is less than $100;
(18) any payment made, or benefit furnished, to or
for the benefit of an employee if at the time of such
payment or such furnishing it is reasonable to believe
that the employee will be able to exclude such payment
or benefit from income under section 127, 129,
134(b)(4), or 134(b)(5);
(19) the value of any meals or lodging furnished by
or on behalf of the employer if at the time of such
furnishing it is reasonable to believe that the
employee will be able to exclude such items from income
under section 119;
(20) any benefit provided to or on behalf of an
employee if at the time such benefit is provided it is
reasonable to believe that the employee will be able to
exclude such benefit from income under section 74(c),
108(f)(4), 117, or 132;
(21) in the case of a member of an Indian tribe, any
remuneration on which no tax is imposed by this chapter
by reason of section 7873 (relating to income derived
by Indians from exercise of fishing rights);
(22) remuneration on account of--
(A) a transfer of a share of stock to any
individual pursuant to an exercise of an
incentive stock option (as defined in section
422(b)) or under an employee stock purchase
plan (as defined in section 423(b)), or
(B) any disposition by the individual of such
stock; or (23) any benefit or payment which is
excludable from the gross income of the
employee under section 139B(b).
Nothing in the regulations prescribed for purposes of chapter
24 (relating to income tax withholding) which provides an
exclusion from ``wages'' as used in such chapter shall be
construed to require a similar exclusion from ``wages'' in the
regulations prescribed for purposes of this chapter. Except as
otherwise provided in regulations prescribed by the Secretary,
any third party which makes a payment included in wages solely
by reason of the parenthetical matter contained in subparagraph
(A) of paragraph (2) shall be treated for purposes of this
chapter and chapter 22 as the employer with respect to such
wages.
(b) Employment.--For purposes of this chapter, the term
``employment'' means any service, of whatever nature, performed
(A) by an employee for the person employing him, irrespective
of the citizenship or residence of either, (i) within the
United States, or (ii) on or in connection with an American
vessel or American aircraft under a contract of service which
is entered into within the United States or during the
performance of which and while the employee is employed on the
vessel or aircraft it touches at a port in the United States,
if the employee is employed on and in connection with such
vessel or aircraft when outside the United States, or (B)
outside the United States by a citizen or resident of the
United States as an employee for an American employer (as
defined in subsection (h)), or (C) if it is service, regardless
of where or by whom performed, which is designated as
employment or recognized as equivalent to employment under an
agreement entered into under section 233 of the Social Security
Act; except that such term shall not include--
(1) service performed by foreign agricultural workers
lawfully admitted to the United States from the
Bahamas, Jamaica, and the other British West Indies, or
from any other foreign country or possession thereof,
on a temporary basis to perform agricultural labor;
(2) domestic service performed in a local college
club, or local chapter of a college fraternity or
sorority, by a student who is enrolled and is regularly
attending classes at a school, college, or university;
(3)(A) service performed by a child under the age of
18 in the employ of his father or mother;
(B) service not in the course of the
employer's trade or business, or domestic
service in a private home of the employer,
performed by an individual under the age of 21
in the employ of his father or mother, or
performed by an individual in the employ of his
spouse or son or daughter; except that the
provisions of this subparagraph shall not be
applicable to such domestic service performed
by an individual in the employ of his son or
daughter if--
(i) the employer is a surviving
spouse or a divorced individual and has
not remarried, or has a spouse living
in the home who has a mental or
physical condition which results in
such spouse's being incapable of caring
for a son, daughter, stepson, or
stepdaughter (referred to in clause
(ii)) for at least 4 continuous weeks
in the calendar quarter in which the
service is rendered, and
(ii) a son, daughter, stepson, or
stepdaughter of such employer is living
in the home, and
(iii) the son, daughter, stepson, or
stepdaughter (referred to in clause
(ii)) has not attained age 18 or has a
mental or physical condition which
requires the personal care and
supervision of an adult for at least 4
continuous weeks in the calendar
quarter in which the service is
rendered;
(4) service performed by an individual on or in
connection with a vessel not an American vessel, or on
or in connection with an aircraft not an American
aircraft, if (A) the individual is employed on and in
connection with such vessel or aircraft, when outside
the United States and (B)(i) such individual is not a
citizen of the United States or (ii) the employer is
not an American employer;
(5) service performed in the employ of the United
States or any instrumentality of the United States, if
such service--
(A) would be excluded from the term
``employment'' for purposes of this title if
the provisions of paragraphs (5) and (6) of
this subsection as in effect in January 1983
had remained in effect, and
(B) is performed by an individual who--
(i) has been continuously performing
service described in subparagraph (A)
since December 31, 1983, and for
purposes of this clause--
(I) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after being separated therefrom
for a period of less than 366
consecutive days, regardless of
whether the period began
before, on, or after December
31, 1983, then such service
shall be considered continuous,
(II) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after being detailed or
transferred to an international
organization as described under
section 3343 of subchapter III
of chapter 33 of title 5,
United States Code, or under
section 3581 of chapter 35 of
such title, then the service
performed for that organization
shall be considered service
described in subparagraph (A),
(III) if an individual
performing service described in
subparagraph (A) is reemployed
or reinstated after being
separated from such service for
the purpose of accepting
employment with the American
Institute in Taiwan as provided
under section 3310 of chapter
48 of title 22, United States
Code, then the service
performed for that Institute
shall be considered service
described in subparagraph (A),
(IV) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after performing service as a
member of a uniformed service
(including, for purposes of
this clause, service in the
National Guard and temporary
service in the Coast Guard
Reserve) and after exercising
restoration or reemployment
rights as provided under
chapter 43 of title 38, United
States Code, then the service
so performed as a member of a
uniformed service shall be
considered service described in
subparagraph (A), and
(V) if an individual
performing service described in
subparagraph (A) returns to the
performance of such service
after employment (by a tribal
organization) to which section
104(e)(2) of the Indian Self-
Determination Act applies, then
the service performed for that
tribal organization shall be
considered service described in
subparagraph (A); or
(ii) is receiving an annuity from the
Civil Service Retirement and Disability
Fund, or benefits (for service as an
employee) under another retirement
system established by a law of the
United States for employees of the
Federal Government (other than for
members of the uniformed service);
except that this paragraph shall not apply with respect
to any such service performed on or after any date on
which such individual performs--
(C) service performed as the President or
Vice President of the United States,
(D) service performed--
(i) in a position placed in the
Executive Schedule under sections 5312
through 5317 of title 5, United States
Code,
(ii) as a noncareer appointee in the
Senior Executive Service or a noncareer
member of the Senior Foreign Service,
or
(iii) in a position to which the
individual is appointed by the
President (or his designee) or the Vice
President under section 105(a)(1),
106(a)(1), or 107 (a)(1) or (b)(1) of
title 3, United States Code, if the
maximum rate of basic pay for such
position is at or above the rate for
level V of the Executive Schedule,
(E) service performed as the Chief Justice of
the United States, an Associate Justice of the
Supreme Court, a judge of a United States court
of appeals, a judge of a United States district
court (including the district court of a
territory), a judge of the United States Court
of Federal Claims, a judge of the United States
Court of International Trade, a judge of the
United States Tax Court, a United States
magistrate judge, or a referee in bankruptcy or
United States bankruptcy judge,
(F) service performed as a Member, Delegate,
or Resident Commissioner of or to the Congress,
(G) any other service in the legislative
branch of the Federal Government if such
service--
(i) is performed by an individual who
was not subject to subchapter III of
chapter 83 of title 5, United States
Code, or to another retirement system
established by a law of the United
States for employees of the Federal
Government (other than for members of
the uniformed services), on December
31, 1983, or
(ii) is performed by an individual
who has, at any time after December 31,
1983, received a lump-sum payment under
section 8342(a) of title 5, United
States Code, or under the corresponding
provision of the law establishing the
other retirement system described in
clause (i), or
(iii) is performed by an individual
after such individual has otherwise
ceased to be subject to subchapter III
of chapter 83 of title 5, United States
Code (without having an application
pending for coverage under such
subchapter), while performing service
in the legislative branch (determined
without regard to the provisions of
subparagraph (B) relating to continuity
of employment), for any period of time
after December 31, 1983,
and for purposes of this subparagraph (G) an
individual is subject to such subchapter III or
to any such other retirement system at any time
only if (a) such individual's pay is subject to
deductions, contributions, or similar payments
(concurrent with the service being performed at
that time) under section 8334(a) of such title
5 or the corresponding provision of the law
establishing such other system, or (in a case
to which section 8332(k)(1) of such title
applies) such individual is making payments of
amounts equivalent to such deductions,
contributions, or similar payments while on
leave without pay, or (b) such individual is
receiving an annuity from the Civil Service
Retirement and Disability Fund, or is receiving
benefits (for service as an employee) under
another retirement system established by a law
of the United States for employees of the
Federal Government (other than for members of
the uniformed services), or
(H) service performed by an individual--
(i) on or after the effective date of
an election by such individual, under
section 301 of the Federal Employees'
Retirement System Act of 1986, section
307 of the Central Intelligence Agency
Retirement Act (50 U.S.C. 2157), or the
Federal Employees' Retirement System
Open Enrollment Act of 1997, to become
subject to the Federal Employees'
Retirement System provided in chapter
84 of title 5, United States Code, or
(ii) on or after the effective date
of an election by such individual,
under regulations issued under section
860 of the Foreign Service Act of 1980,
to become subject to the Foreign
Service Pension System provided in
subchapter II of chapter 8 of title I
of such Act;
(6) service performed in the employ of the United
States or any instrumentality of the United States if
such service is performed--
(A) in a penal institution of the United
States by an inmate thereof;
(B) by any individual as an employee included
under section 5351(2) of title 5, United States
Code (relating to certain interns, student
nurses, and other student employees of
hospitals of the Federal Government), other
than as a medical or dental intern or a medical
or dental resident in training; or
(C) by any individual as an employee serving
on a temporary basis in case of fire, storm,
earthquake, flood, or other similar emergency;
(7) service performed in the employ of a State, or
any political subdivision thereof, or any
instrumentality of any one or more of the foregoing
which is wholly owned thereby, except that this
paragraph shall not apply in the case of--
(A) service which, under subsection (j),
constitutes covered transportation service,
(B) service in the employ of the Government
of Guam or the Government of American Samoa or
any political subdivision thereof, or of any
instrumentality of any one or more of the
foregoing which is wholly owned thereby,
performed by an officer or employee thereof
(including a member of the legislature of any
such Government or political subdivision), and,
for purposes of this title with respect to the
taxes imposed by this chapter--
(i) any person whose service as such
an officer or employee is not covered
by a retirement system established by a
law of the United States shall not,
with respect to such service, be
regarded as an employee of the United
States or any agency or instrumentality
thereof, and
(ii) the remuneration for service
described in clause (i) (including fees
paid to a public official) shall be
deemed to have been paid by the
Government of Guam or the Government of
American Samoa or by a political
subdivision thereof or an
instrumentality of any one or more of
the foregoing which is wholly owned
thereby, whichever is appropriate,
(C) service performed in the employ of the
District of Columbia or any instrumentality
which is wholly owned thereby, if such service
is not covered by a retirement system
established by a law of the United States
(other than the Federal Employees Retirement
System provided in chapter 84 of title 5,
United States Code); except that the provisions
of this subparagraph shall not be applicable to
service performed--
(i) in a hospital or penal
institution by a patient or inmate
thereof;
(ii) by any individual as an employee
included under section 5351(2) of title
5, United States Code (relating to
certain interns, student nurses, and
other student employees of hospitals of
the District of Columbia Government),
other than as a medical or dental
intern or as a medical or dental
resident in training;
(iii) by any individual as an
employee serving on a temporary basis
in case of fire, storm, snow,
earthquake, flood or other similar
emergency; or
(iv) by a member of a board,
committee, or council of the District
of Columbia, paid on a per diem,
meeting, or other fee basis,
(D) service performed in the employ of the
Government of Guam (or any instrumentality
which is wholly owned by such Government) by an
employee properly classified as a temporary or
intermittent employee, if such service is not
covered by a retirement system established by a
law of Guam; except that (i) the provisions of
this subparagraph shall not be applicable to
services performed by an elected official or a
member of the legislature or in a hospital or
penal institution by a patient or inmate
thereof, and (ii) for purposes of this
subparagraph, clauses (i) and (ii) of
subparagraph (B) shall apply,
(E) service included under an agreement
entered into pursuant to section 218 of the
Social Security Act, or
(F) service in the employ of a State (other
than the District of Columbia, Guam, or
American Samoa), of any political subdivision
thereof, or of any instrumentality of any one
or more of the foregoing which is wholly owned
thereby, by an individual who is not a member
of a retirement system of such State, political
subdivision, or instrumentality, except that
the provisions of this subparagraph shall not
be applicable to service performed--
(i) by an individual who is employed
to relieve such individual from
unemployment;
(ii) in a hospital, home, or other
institution by a patient or inmate
thereof;
(iii) by any individual as an
employee serving on a temporary basis
in case of fire, storm, snow,
earthquake, flood, or other similar
emergency;
(iv) by an election official or
election worker if the remuneration
paid in a calendar year for such
service is less than $1,000 with
respect to service performed during any
calendar year commencing on or after
January 1, 1995, ending on or before
December 31, 1999, and the adjusted
amount determined under section
218(c)(8)(B) of the Social Security Act
for any calendar year commencing on or
after January 1, 2000, with respect to
service performed during such calendar
year; or
(v) by an employee in a position
compensated solely on a fee basis which
is treated pursuant to section
1402(c)(2)(E) as a trade or business
for purposes of inclusion of such fees
in net earnings from self-employment;
for purposes of this subparagraph, except as
provided in regulations prescribed by the
Secretary, the term ``retirement system'' has
the meaning given such term by section
218(b)(4) of the Social Security Act;
(8)(A) service performed by a duly ordained,
commissioned, or licensed minister of a church in the
exercise of his ministry or by a member of a religious
order in the exercise of duties required by such order,
except that this subparagraph shall not apply to
service performed by a member of such an order in the
exercise of such duties, if an election of coverage
under subsection (r) is in effect with respect to such
order, or with respect to the autonomous subdivision
thereof to which such member belongs;
(B) service performed in the employ of a
church or qualified church-controlled
organization if such church or organization has
in effect an election under subsection (w),
other than service in an unrelated trade or
business (within the meaning of section
513(a));
(9) service performed by an individual as an employee
or employee representative as defined in section 3231;
(10) service performed in the employ of--
(A) a school, college, or university, or
(B) an organization described in section
509(a)(3) if the organization is organized, and
at all times thereafter is operated,
exclusively for the benefit of, to perform the
functions of, or to carry out the purposes of a
school, college, or university and is operated,
supervised, or controlled by or in connection
with such school, college, or university,
unless it is a school, college, or university
of a State or a political subdivision thereof
and the services performed in its employ by a
student referred to in section 218(c)(5) of the
Social Security Act are covered under the
agreement between the Commissioner of Social
Security and such State entered into pursuant
to section 218 of such Act;
if such service is performed by a student who is
enrolled and regularly attending classes at such
school, college, or university;
(11) service performed in the employ of a foreign
government (including service as a consular or other
officer or employee or a nondiplomatic representative);
(12) service performed in the employ of an
instrumentality wholly owned by a foreign government--
(A) if the service is of a character similar
to that performed in foreign countries by
employees of the United States Government or of
an instrumentality thereof; and
(B) if the Secretary of State shall certify
to the Secretary of the Treasury that the
foreign government, with respect to whose
instrumentality and employees thereof exemption
is claimed, grants an equivalent exemption with
respect to similar service performed in the
foreign country by employees of the United
States Government and of instrumentalities
thereof;
(13) service performed as a student nurse in the
employ of a hospital or a nurses' training school by an
individual who is enrolled and is regularly attending
classes in a nurses' training school chartered or
approved pursuant to State law;
(14)(A) service performed by an individual under the
age of 18 in the delivery or distribution of newspapers
or shopping news, not including delivery or
distribution to any point for subsequent delivery or
distribution;
(B) service performed by an individual in,
and at the time of, the sale of newspapers or
magazines to ultimate consumers, under an
arrangement under which the newspapers or
magazines are to be sold by him at a fixed
price, his compensation being based on the
retention of the excess of such price over the
amount at which the newspapers or magazines are
charged to him, whether or not he is guaranteed
a minimum amount of compensation for such
service, or is entitled to be credited with the
unsold newspapers or magazines turned back;
(15) service performed in the employ of an
international organization, except service which
constitutes ``employment'' under subsection (y);
(16) service performed by an individual under an
arrangement with the owner or tenant of land pursuant
to which--
(A) such individual undertakes to produce
agricultural or horticultural commodities
(including livestock, bees, poultry, and fur-
bearing animals and wildlife) on such land,
(B) the agricultural or horticultural
commodities produced by such individual, or the
proceeds therefrom, are to be divided between
such individual and such owner or tenant, and
(C) the amount of such individual's share
depends on the amount of the agricultural or
horticultural commodities produced;
(18) service performed in Guam by a resident of the
Republic of the Philippines while in Guam on a
temporary basis as a nonimmigrant alien admitted to
Guam pursuant to section 101(a)(15)(H)(ii) of the
Immigration and Nationality Act (8 U.S.C.
1101(a)(15)(H)(ii));
(19) Service which is performed by a nonresident
alien individual for the period he is temporarily
present in the United States as a nonimmigrant under
subparagraph (F), (J), (M), or (Q) of section
101(a)(15) of the Immigration and Nationality Act, as
amended, and which is performed to carry out the
purpose specified in subparagraph (F), (J), (M), or
(Q), as the case may be;
(20) service (other than service described in
paragraph (3)(A)) performed by an individual on a boat
engaged in catching fish or other forms of aquatic
animal life under an arrangement with the owner or
operator of such boat pursuant to which--
(A) such individual does not receive any cash
remuneration other than as provided in
subparagraph (B) and other than cash
remuneration--
(i) which does not exceed $100 per
trip;
(ii) which is contingent on a minimum
catch; and
(iii) which is paid solely for
additional duties (such as mate,
engineer, or cook) for which additional
cash remuneration is traditional in the
industry,
(B) such individual receives a share of the
boat's (or the boats' in the case of a fishing
operation involving more than one boat) catch
of fish or other forms of aquatic animal life
or a share of the proceeds from the sale of
such catch, and
(C) the amount of such individual's share
depends on the amount of the boat's (or the
boats' in the case of a fishing operation
involving more than one boat) catch of fish or
other forms of aquatic animal life,
but only if the operating crew of such boat (or each
boat from which the individual receives a share in the
case of a fishing operation involving more than one
boat) is normally made up of fewer than 10 individuals;
[or]
(21) domestic service in a private home of the
employer which--
(A) is performed in any year by an individual
under the age of 18 during any portion of such
year; and
(B) is not the principal occupation of such
employee[.]; or
(22) service performed by members of Indian tribal
councils as tribal council members in the employ of an
Indian tribal government, except that this paragraph
shall not apply in the case of service included under
an agreement under section 218A of the Social Security
Act.
For purposes of paragraph (20), the operating crew of a boat
shall be treated as normally made up of fewer than 10
individuals if the average size of the operating crew on trips
made during the preceding 4 calendar quarters consisted of
fewer than 10 individuals.
(c) Included and Excluded Service.--For purposes of this
chapter, if the services performed during one-half or more of
any pay period by an employee for the person employing him
constitute employment, all the services of such employee for
such period shall be deemed to be employment; but if the
services performed during more than one-half of any such pay
period by an employee for the person employing him do not
constitute employment, then none of the services of such
employee for such period shall be deemed to be employment. As
used in this subsection, the term ``pay period'' means a period
(of not more than 31 consecutive days) for which a payment of
remuneration is ordinarily made to the employee by the person
employing him. This subsection shall not be applicable with
respect to services performed in a pay period by an employee
for the person employing him, where any of such service is
excepted by subsection (b)(9).
(d) Employee.--For purposes of this chapter, the term
``employee'' means--
(1) any officer of a corporation; or
(2) any individual who, under the usual common law
rules applicable in determining the employer-employee
relationship, has the status of an employee; or
(3) any individual (other than an individual who is
an employee under paragraph (1) or (2)) who performs
services for remuneration for any person--
(A) as an agent-driver or commission-driver
engaged in distributing meat products,
vegetable products, fruit products, bakery
products, beverages (other than milk), or
laundry or dry-cleaning services, for his
principal;
(B) as a full-time life insurance salesman;
(C) as a home worker performing work,
according to specifications furnished by the
person for whom the services are performed, on
materials or goods furnished by such person
which are required to be returned to such
person or a person designated by him; or
(D) as a traveling or city salesman, other
than as an agent-driver or commission-driver,
engaged upon a full-time basis in the
solicitation on behalf of, and the transmission
to, his principal (except for side-line sales
activities on behalf of some other person) of
orders from wholesalers, retailers,
contractors, or operators of hotels,
restaurants, or other similar establishments
for merchandise for resale or supplies for use
in their business operations;
if the contract of service contemplates that
substantially all of such services are to be performed
personally by such individual; except that an
individual shall not be included in the term
``employee'' under the provisions of this paragraph if
such individual has a substantial investment in
facilities used in connection with the performance of
such services (other than in facilities for
transportation), or if the services are in the nature
of a single transaction not part of a continuing
relationship with the person for whom the services are
performed; or
(4) any individual who performs services that are
included under an agreement entered into pursuant to
section 218 or 218A of the Social Security Act.
(e) State, United States, and Citizen.--For purposes of this
chapter--
(1) State.--The term ``State'' includes the District
of Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, and American Samoa.
(2) United States.--The term ``United States'' when
used in a geographical sense includes the Commonwealth
of Puerto Rico, the Virgin Islands, Guam, and American
Samoa.
An individual who is a citizen of the Commonwealth of Puerto
Rico (but not otherwise a citizen of the United States) shall
be considered, for purposes of this section, as a citizen of
the United States.
(f) American Vessel and Aircraft.--For purposes of this
chapter, the term ``American vessel'' means any vessel
documented or numbered under the laws of the United States; and
includes any vessel which is neither documented or numbered
under the laws of the United States nor documented under the
laws of any foreign country, if its crew is employed solely by
one or more citizens or residents of the United States or
corporations organized under the laws of the United States or
of any State; and the term ``American aircraft'' means an
aircraft registered under the laws of the United States.
(g) Agricultural Labor.--For purposes of this chapter, the
term ``agricultural labor'' includes all service performed--
(1) on a farm, in the employ of any person, in
connection with cultivating the soil, or in connection
with raising or harvesting any agricultural or
horticultural commodity, including the raising,
shearing, feeding, caring for, training, and management
of livestock, bees, poultry, and fur-bearing animals
and wildlife;
(2) in the employ of the owner or tenant or other
operator of a farm, in connection with the operation,
management, conservation, improvement, or maintenance
of such farm and its tools and equipment, or in
salvaging timber or clearing land of brush and other
debris left by a hurricane, if the major part of such
service is performed on a farm;
(3) in connection with the production or harvesting
of any commodity defined as an agricultural commodity
in section 15(g) of the Agricultural Marketing Act, as
amended (12 U.S.C. 1141j), or in connection with the
ginning of cotton, or in connection with the operation
or maintenance of ditches, canals, reservoirs, or
waterways, not owned or operated for profit, used
exclusively for supplying and storing water for farming
purposes;
(4)(A) in the employ of the operator of a farm in
handling, planting, drying, packing, packaging,
processing, freezing, grading, storing, or delivering
to storage or to market or to a carrier for
transportation to market, in its unmanufactured state,
any agricultural or horticultural commodity; but only
if such operator produced more than one-half of the
commodity with respect to which such service is
performed;
(B) in the employ of a group of operators of
farms (other than a cooperative organization)
in the performance of service described in
subparagraph (A), but only if such operators
produced all of the commodity with respect to
which such service is performed. For purposes
of this subparagraph, any unincorporated group
of operators shall be deemed a cooperative
organization if the number of operators
comprising such group is more than 20 at any
time during the calendar year in which such
service is performed;
(C) the provisions of subparagraphs (A) and
(B) shall not be deemed to be applicable with
respect to service performed in connection with
commercial canning or commercial freezing or in
connection with any agricultural or
horticultural commodity after its delivery to a
terminal market for distribution for
consumption; or
(5) on a farm operated for profit if such service is
not in the course of the employer's trade or business.
As used in this subsection, the term ``farm'' includes stock,
dairy, poultry, fruit, fur-bearing animal, and truck farms,
plantations, ranches, nurseries, ranges, greenhouses or other
similar structures used primarily for the raising of
agricultural or horticultural commodities, and orchards.
(h) American Employer.--For purposes of this chapter, the
term ``American employer'' means an employer which is--
(1) the United States or any instrumentality thereof,
(2) an individual who is a resident of the United
States,
(3) a partnership, if two-thirds or more of the
partners are residents of the United States,
(4) a trust, if all of the trustees are residents of
the United States, or
(5) a corporation organized under the laws of the
United States or of any State.
(i) Computation of Wages in Certain Cases.--
(1) Domestic service.--For purposes of this chapter,
in the case of domestic service described in subsection
(a)(7)(B), any payment of cash remuneration for such
service which is more or less than a whole-dollar
amount shall, under such conditions and to such extent
as may be prescribed by regulations made under this
chapter, be computed to the nearest dollar. For the
purpose of the computation to the nearest dollar, the
payment of a fractional part of a dollar shall be
disregarded unless it amounts to one-half dollar or
more, in which case it shall be increased to $1. The
amount of any payment of cash remuneration so computed
to the nearest dollar shall, in lieu of the amount
actually paid, be deemed to constitute the amount of
cash remuneration for purposes of subsection (a)(7)(B).
(2) Service in the uniformed services.--For purposes
of this chapter, in the case of an individual
performing service, as a member of a uniformed service,
to which the provisions of subsection (m)(1) are
applicable, the term ``wages'' shall, subject to the
provisions of subsection (a)(1) of this section,
include as such individual's remuneration for such
service only (A) his basic pay as described in chapter
3 and section 1009 of title 37, United States Code, in
the case of an individual performing service to which
subparagraph (A) of such subsection (m)(1) applies, or
(B) his compensation for such service as determined
under section 206(a) of title 37, United States Code,
in the case of an individual performing service to
which subparagraph (B) of such subsection (m)(1)
applies.
(3) Peace Corps volunteer service.--For purposes of
this chapter, in the case of an individual performing
service, as a volunteer or volunteer leader within the
meaning of the Peace Corps Act, to which the provisions
of section 3121(p) are applicable, the term ``wages''
shall, subject to the provisions of subsection (a)(1)
of this section, include as such individual's
remuneration for such service only amounts paid
pursuant to section 5(c) or 6(1) of the Peace Corps
Act.
(4) Service performed by certain members of religious
orders.--For purposes of this chapter, in any case
where an individual is a member of a religious order
(as defined in subsection (r)(2)) performing service in
the exercise of duties required by such order, and an
election of coverage under subsection (r) is in effect
with respect to such order or with respect to the
autonomous subdivision thereof to which such member
belongs, the term ``wages'' shall, subject to the
provisions of subsection (a)(1), include as such
individual's remuneration for such service the fair
market value of any board, lodging, clothing, and other
perquisites furnished to such member by such order or
subdivision thereof or by any other person or
organization pursuant to an agreement with such order
or subdivision, except that the amount included as such
individual's remuneration under this paragraph shall
not be less than $100 a month.
(5) Service performed by certain retired justices and
judges.--For purposes of this chapter, in the case of
an individual performing service under the provisions
of section 294 of title 28, United States Code
(relating to assignment of retired justices and judges
to active duty), the term ``wages'' shall not include
any payment under section 371(b) of such title 28 which
is received during the period of such service.
(j) Covered Transportation Service.--For purposes of this
chapter--
(1) Existing transportation systems - General rule.--
Except as provided in paragraph (2), all service
performed in the employ of a State or political
subdivision in connection with its operation of a
public transportation system shall constitute covered
transportation service if any part of the
transportation system was acquired from private
ownership after 1936 and prior to 1951.
(2) Existing transportation systems - Cases in which
no transportation employees, or only certain employees,
are covered.--Service performed in the employ of a
State or political subdivision in connection with the
operation of its public transportation system shall not
constitute covered transportation service if--
(A) any part of the transportation system was
acquired from private ownership after 1936 and
prior to 1951, and substantially all service in
connection with the operation of the
transportation system was, on December 31,
1950, covered under a general retirement system
providing benefits which, by reason of a
provision of the State constitution dealing
specifically with retirement systems of the
State or political subdivisions thereof, cannot
be diminished or impaired; or
(B) no part of the transportation system
operated by the State or political subdivision
on December 31, 1950, was acquired from private
ownership after 1936 and prior to 1951;
except that if such State or political subdivision
makes an acquisition after 1950 from private ownership
of any part of its transportation system, then, in the
case of any employee who--
(C) became an employee of such State or
political subdivision in connection with and at
the time of its acquisition after 1950 of such
part, and
(D) prior to such acquisition rendered
service in employment (including as employment
service covered by an agreement under section
218 of the Social Security Act) in connection
with the operation of such part of the
transportation system acquired by the State or
political subdivision,
the service of such employee in connection with the
operation of the transportation system shall constitute
covered transportation service, commencing with the
first day of the third calendar quarter following the
calendar quarter in which the acquisition of such part
took place, unless on such first day such service of
such employee is covered by a general retirement system
which does not, with respect to such employee, contain
special provisions applicable only to employees
described in subparagraph (C).
(3) Transportation systems acquired after 1950.--All
service performed in the employ of a State or political
subdivision thereof in connection with its operation of
a public transportation system shall constitute covered
transportation service if the transportation system was
not operated by the State or political subdivision
prior to 1951 and, at the time of its first acquisition
(after 1950) from private ownership of any part of its
transportation system, the State or political
subdivision did not have a general retirement system
covering substantially all service performed in
connection with the operation of the transportation
system.
(4) Definitions.--For purposes of this subsection--
(A) The term ``general retirement system''
means any pension, annuity, retirement, or
similar fund or system established by a State
or by a political subdivision thereof for
employees of the State, political subdivision,
or both; but such term shall not include such a
fund or system which covers only service
performed in positions connected with the
operation of its public transportation system.
(B) A transportation system or a part thereof
shall be considered to have been acquired by a
State or political subdivision from private
ownership if prior to the acquisition service
performed by employees in connection with the
operation of the system or part thereof
acquired constituted employment under this
chapter or subchapter A of chapter 9 of the
Internal Revenue Code of 1939 or was covered by
an agreement made pursuant to section 218 of
the Social Security Act and some of such
employees became employees of the State or
political subdivision in connection with and at
the time of such acquisition.
(C) The term ``political subdivision''
includes an instrumentality of--
(i) a State,
(ii) one or more political
subdivisions of a State, or
(iii) a State and one or more of its
political subdivisions.
(l) Agreements Entered Into by American Employers With
Respect to Foreign Affiliates.--
(1) Agreement with respect to certain employees of
foreign affiliate.--The Secretary shall, at the
American employer's request, enter into an agreement
(in such manner and form as may be prescribed by the
Secretary) with any American employer (as defined in
subsection (h)) who desires to have the insurance
system established by title II of the Social Security
Act extended to service performed outside the United
States in the employ of any 1 or more of such
employer's foreign affiliates (as defined in paragraph
(6)) by all employees who are citizens or residents of
the United States, except that the agreement shall not
apply to any service performed by, or remuneration paid
to, an employee if such service or remuneration would
be excluded from the term ``employment'' or ``wages'',
as defined in this section, had the service been
performed in the United States. Such agreement may be
amended at any time so as to be made applicable, in the
same manner and under the same conditions, with respect
to any other foreign affiliate of such American
employer. Such agreement shall be applicable with
respect to citizens or residents of the United States
who, on or after the effective date of the agreement,
are employees of and perform services outside the
United States for any foreign affiliate specified in
the agreement. Such agreement shall provide--
(A) that the American employer shall pay to
the Secretary, at such time or times as the
Secretary may by regulations prescribe, amounts
equivalent to the sum of the taxes which would
be imposed by sections 3101 and 3111 (including
amounts equivalent to the interest, additions
to the taxes, additional amounts, and penalties
which would be applicable) with respect to the
remuneration which would be wages if the
services covered by the agreement constituted
employment as defined in this section; and
(B) that the American employer will comply
with such regulations relating to payments and
reports as the Secretary may prescribe to carry
out the purposes of this subsection.
(2) Effective period of agreement.--An agreement
entered into pursuant to paragraph (1) shall be in
effect for the period beginning with the first day of
the calendar quarter in which such agreement is entered
into or the first day of the succeeding calendar
quarter, as may be specified in the agreement; except
that in case such agreement is amended to include the
services performed for any other affiliate and such
amendment is executed after the first month following
the first calendar quarter for which the agreement is
in effect, the agreement shall be in effect with
respect to service performed for such other affiliate
only after the calendar quarter in which such amendment
is executed. Notwithstanding any other provision of
this subsection, the period for which any such
agreement is effective with respect to any foreign
entity shall terminate at the end of any calendar
quarter in which the foreign entity, at any time in
such quarter, ceases to be a foreign affiliate as
defined in paragraph (6).
(3) No termination of agreement.--No agreement under
this subsection may be terminated, either in its
entirety or with respect to any foreign affiliate, on
or after June 15, 1989.
(4) Deposits in trust funds.--For purposes of section
201 of the Social Security Act, relating to
appropriations to the Federal Old-Age and Survivors
Insurance Trust Fund and the Federal Disability
Insurance Trust Fund, such remuneration--
(A) paid for services covered by an agreement
entered into pursuant to paragraph (1) as would
be wages if the services constituted
employment, and
(B) as is reported to the Secretary pursuant
to the provisions of such agreement or of the
regulations issued under this subsection,
shall be considered wages subject to the taxes imposed
by this chapter.
(5) Overpayments and underpayments.--
(A) If more or less than the correct amount
due under an agreement entered into pursuant to
this subsection is paid with respect to any
payment of remuneration, proper adjustments
with respect to the amounts due under such
agreement shall be made, without interest, in
such manner and at such times as may be
required by regulations prescribed by the
Secretary.
(B) If an overpayment cannot be adjusted
under subparagraph (A), the amount thereof
shall be paid by the Secretary, through the
Fiscal Service of the Treasury Department, but
only if a claim for such overpayment is filed
with the Secretary within two years from the
time such overpayment was made.
(6) Foreign affiliate defined.--For purposes of this
subsection and section 210(a) of the Social Security
Act--
(A) In general.--A foreign affiliate of an
American employer is any foreign entity in
which such American employer has not less than
a 10-percent interest.
(B) Determination of 10-percent interest.--
For purposes of subparagraph (A), an American
employer has a 10-percent interest in any
entity if such employer has such an interest
directly (or through one or more entities)--
(i) in the case of a corporation, in
the voting stock thereof, and
(ii) in the case of any other entity,
in the profits thereof.
(7) American employer as separate entity.--Each
American employer which enters into an agreement
pursuant to paragraph (1) of this subsection shall, for
purposes of this subsection and section 6413(c)(2)(C),
relating to special refunds in the case of employees of
certain foreign entities, be considered an employer in
its capacity as a party to such agreement separate and
distinct from its identity as a person employing
individuals on its own account.
(8) Regulations.--Regulations of the Secretary to
carry out the purposes of this subsection shall be
designed to make the requirements imposed on American
employers with respect to services covered by an
agreement entered into pursuant to this subsection the
same, so far as practicable, as those imposed upon
employers pursuant to this title with respect to the
taxes imposed by this chapter.
(m) Service in the Uniformed Services.--For purposes of this
chapter--
(1) Inclusion of service.--The term ``employment''
shall, notwithstanding the provisions of subsection (b)
of this section, include--
(A) service performed by an individual as a
member of a uniformed service on active duty,
but such term shall not include any such
service which is performed while on leave
without pay, and
(B) service performed by an individual as a
member of a uniformed service on inactive duty
training.
(2) Active duty.--The term ``active duty'' means
``active duty'' as described in paragraph (21) of
section 101 of title 38, United States Code, except
that it shall also include ``active duty for training''
as described in paragraph (22) of such section.
(3) Inactive duty training.--The term ``inactive duty
training'' means ``inactive duty training'' as
described in paragraph (23) of such section 101.
(n) Member of a Uniformed Service.--For purposes of this
chapter, the term ``member of a uniformed service'' means any
person appointed, enlisted, or inducted in a component of the
Army, Navy, Air Force, Marine Corps, or Coast Guard (including
a reserve component as defined in section 101(27) of title 38,
United States Code), or in one of those services without
specification of component, or as a commissioned officer of the
Coast and Geodetic Survey, the National Oceanic and Atmospheric
Administration Corps, or the Regular or Reserve Corps of the
Public Health Service, and any person serving in the Army or
Air Force under call or conscription. The term includes--
(1) a retired member of any of those services;
(2) a member of the Fleet Reserve or Fleet Marine
Corps Reserve;
(3) a cadet at the United States Military Academy, a
midshipman at the United States Naval Academy, and a
cadet at the United States Coast Guard Academy or
United States Air Force Academy;
(4) a member of the Reserve Officers' Training Corps,
the Naval Reserve Officers' Training Corps, or the Air
Force Reserve Officers' Training Corps, when ordered to
annual training duty for fourteen days or more, and
while performing authorized travel to and from that
duty; and
(5) any person while en route to or from, or at, a
place for final acceptance or for entry upon active
duty in the military, naval, or air service--
(A) who has been provisionally accepted for
such duty; or
(B) who, under the Military Selective Service
Act, has been selected for active military,
naval, or air service;
and has been ordered or directed to proceed to such place.
The term does not include a temporary member of the Coast Guard
Reserve.
(o) Crew Leader.--For purposes of this chapter, the term
``crew leader'' means an individual who furnishes individuals
to perform agricultural labor for another person, if such
individual pays (either on his own behalf or on behalf of such
person) the individuals so furnished by him for the
agricultural labor performed by them and if such individual has
not entered into a written agreement with such person whereby
such individual has been designated as an employee of such
person; and such individuals furnished by the crew leader to
perform agricultural labor for another person shall be deemed
to be the employees of such crew leader. For purposes of this
chapter and chapter 2, a crew leader shall, with respect to
service performed in furnishing individuals to perform
agricultural labor for another person and service performed as
a member of the crew, be deemed not to be an employee of such
other person.
(p) Peace Corps Volunteer Service.--For purposes of this
chapter, the term ``employment'' shall, notwithstanding the
provisions of subsection (b) of this section, include service
performed by an individual as a volunteer or volunteer leader
within the meaning of the Peace Corps Act.
(q) Tips Included for Both Employee and Employer Taxes.--For
purposes of this chapter, tips received by an employee in the
course of his employment shall be considered remuneration for
such employment (and deemed to have been paid by the employer
for purposes of subsections (a) and (b) of section 3111). Such
remuneration shall be deemed to be paid at the time a written
statement including such tips is furnished to the employer
pursuant to section 6053(a) or (if no statement including such
tips is so furnished) at the time received; except that, in
determining the employer's liability in connection with the
taxes imposed by section 3111 with respect to such tips in any
case where no statement including such tips was so furnished
(or to the extent that the statement so furnished was
inaccurate or incomplete), such remuneration shall be deemed
for purposes of subtitle F to be paid on the date on which
notice and demand for such taxes is made to the employer by the
Secretary.
(r) Election of Coverage by Religious Orders.--
(1) Certificate of election by order.--A religious
order whose members are required to take a vow of
poverty, or any autonomous subdivision of such order,
may file a certificate (in such form and manner, and
with such official, as may be prescribed by regulations
under this chapter) electing to have the insurance
system established by title II of the Social Security
Act extended to services performed by its members in
the exercise of duties required by such order or such
subdivision thereof. Such certificate of election shall
provide that--
(A) such election of coverage by such order
or subdivision shall be irrevocable;
(B) such election shall apply to all current
and future members of such order, or in the
case of a subdivision thereof to all current
and future members of such order who belong to
such subdivision;
(C) all services performed by a member of
such an order or subdivision in the exercise of
duties required by such order or subdivision
shall be deemed to have been performed by such
member as an employee of such order or
subdivision; and
(D) the wages of each member, upon which such
order or subdivision shall pay the taxes
imposed by sections 3101 and 3111, will be
determined as provided in subsection (i)(4).
(2) Definition of member.--For purposes of this
subsection, a member of a religious order means any
individual who is subject to a vow of poverty as a
member of such order and who performs tasks usually
required (and to the extent usually required) of an
active member of such order and who is not considered
retired because of old age or total disability.
(3) Effective date for election.--
(A) A certificate of election of coverage
shall be in effect, for purposes of subsection
(b)(8) and for purposes of section 210(a)(8) of
the Social Security Act, for the period
beginning with whichever of the following may
be designated by the order or subdivision
thereof:
(i) the first day of the calendar
quarter in which the certificate is
filed,
(ii) the first day of the calendar
quarter succeeding such quarter, or
(iii) the first day of any calendar
quarter preceding the calendar quarter
in which the certificate is filed,
except that such date may not be
earlier than the first day of the
twentieth calendar quarter preceding
the quarter in which such certificate
is filed.
Whenever a date is designated under clause
(iii), the election shall apply to services
performed before the quarter in which the
certificate is filed only if the member
performing such services was a member at the
time such services were performed and is living
on the first day of the quarter in which such
certificate is filed.
(B) If a certificate of election filed
pursuant to this subsection is effective for
one or more calendar quarters prior to the
quarter in which such certificate is filed,
then--
(i) for purposes of computing
interest and for purposes of section
6651 (relating to addition to tax for
failure to file tax return), the due
date for the return and payment of the
tax for such prior calendar quarters
resulting from the filing of such
certificate shall be the last day of
the calendar month following the
calendar quarter in which the
certificate is filed; and
(ii) the statutory period for the
assessment of such tax shall not expire
before the expiration of 3 years from
such due date.
(s) Concurrent Employment by Two or More Employers.--For
purposes of sections 3102, 3111, and 3121(a)(1), if two or more
related corporations concurrently employ the same individual
and compensate such individual through a common paymaster which
is one of such corporations, each such corporation shall be
considered to have paid as remuneration to such individual only
the amounts actually disbursed by it to such individual and
shall not be considered to have paid as remuneration to such
individual amounts actually disbursed to such individual by
another of such corporations.
(u) Application of Hospital Insurance Tax to Federal, State,
and Local Employment.--
(1) Federal employment.--For purposes of the taxes
imposed by sections 3101(b) and 3111(b), subsection (b)
shall be applied without regard to paragraph (5)
thereof.
(2) State and local employment.--For purposes of the
taxes imposed by sections 3101(b) and 3111(b)--
(A) In general.--Except as provided in
subparagraphs (B) and (C), subsection (b) shall
be applied without regard to paragraph (7)
thereof.
(B) Exception for certain services.--Service
shall not be treated as employment by reason of
subparagraph (A) if--
(i) the service is included under an
agreement under section 218 of the
Social Security Act, or
(ii) the service is performed--
(I) by an individual who is
employed by a State or
political subdivision thereof
to relieve him from
unemployment,
(II) in a hospital, home, or
other institution by a patient
or inmate thereof as an
employee of a State or
political subdivision thereof
or of the District of Columbia,
(III) by an individual, as an
employee of a State or
political subdivision thereof
or of the District of Columbia,
serving on a temporary basis in
case of fire, storm, snow,
earthquake, flood or other
similar emergency,
(IV) by any individual as an
employee included under section
5351(2) of title 5, United
States Code (relating to
certain interns, student
nurses, and other student
employees of hospitals of the
District of Columbia
Government), other than as a
medical or dental intern or a
medical or dental resident in
training,
(V) by an election official
or election worker if the
remuneration paid in a calendar
year for such service is less
than $1,000 with respect to
service performed during any
calendar year commencing on or
after January 1, 1995, ending
on or before December 31, 1999,
and the adjusted amount
determined under section
218(c)(8)(B) of the Social
Security Act for any calendar
year commencing on or after
January 1, 2000, with respect
to service performed during
such calendar year, or
(VI) by an individual in a
position described in section
1402(c)(2)(E).
As used in this subparagraph, the terms
``State'' and ``political subdivision'' have
the meanings given those terms in section
218(b) of the Social Security Act.
(C) Exception for current employment which
continues.--Service performed for an employer
shall not be treated as employment by reason of
subparagraph (A) if--
(i) such service would be excluded
from the term ``employment'' for
purposes of this chapter if
subparagraph (A) did not apply;
(ii) such service is performed by an
individual--
(I) who was performing
substantial and regular service
for remuneration for that
employer before April 1, 1986,
(II) who is a bona fide
employee of that employer on
March 31, 1986, and
(III) whose employment
relationship with that employer
was not entered into for
purposes of meeting the
requirements of this
subparagraph; and
(iii) the employment relationship
with that employer has not been
terminated after March 31, 1986.
(D) Treatment of agencies and
instrumentalities.--For purposes of
subparagraph (C), under regulations--
(i) All agencies and
instrumentalities of a State (as
defined in section 218(b) of the Social
Security Act) or of the District of
Columbia shall be treated as a single
employer.
(ii) All agencies and
instrumentalities of a political
subdivision of a State (as so defined)
shall be treated as a single employer
and shall not be treated as described
in clause (i).
(3) Medicare qualified government employment.--For
purposes of this chapter, the term ``medicare qualified
government employment'' means service which--
(A) is employment (as defined in subsection
(b)) with the application of paragraphs (1) and
(2), but
(B) would not be employment (as so defined)
without the application of such paragraphs.
(v) Treatment of Certain Deferred Compensation and Salary
Reduction Arrangements.--
(1) Certain employer contributions treated as
wages.--Nothing in any paragraph of subsection (a)
(other than paragraph (1)) shall exclude from the term
``wages''--
(A) any employer contribution under a
qualified cash or deferred arrangement (as
defined in section 401(k)) to the extent not
included in gross income by reason of section
402(e)(3) or consisting of designated Roth
contributions (as defined in section 402A(c)),
or
(B) any amount treated as an employer
contribution under section 414(h)(2) where the
pickup referred to in such section is pursuant
to a salary reduction agreement (whether
evidenced by a written instrument or
otherwise).
(2) Treatment of certain nonqualified deferred
compensation plans.--
(A) In general.--Any amount deferred under a
nonqualified deferred compensation plan shall
be taken into account for purposes of this
chapter as of the later of--
(i) when the services are performed,
or
(ii) when there is no substantial
risk of forfeiture of the rights to
such amount.
The preceding sentence shall not apply to any
excess parachute payment (as defined in section
280G(b)) or to any specified stock compensation
(as defined in section 4985) on which tax is
imposed by section 4985.
(B) Taxed only once.--Any amount taken into
account as wages by reason of subparagraph (A)
(and the income attributable thereto) shall not
thereafter be treated as wages for purposes of
this chapter.
(C) Nonqualified deferred compensation
plan.--For purposes of this paragraph, the term
``nonqualified deferred compensation plan''
means any plan or other arrangement for
deferral of compensation other than a plan
described in subsection (a)(5).
(3) Exempt governmental deferred compensation plan.--
For purposes of subsection (a)(5), the term ``exempt
governmental deferred compensation plan'' means any
plan providing for deferral of compensation established
and maintained for its employees by the United States,
by a State or political subdivision thereof, or by an
agency or instrumentality of any of the foregoing. Such
term shall not include--
(A) any plan to which section 83, 402(b),
403(c), 457(a), or 457(f)(1) applies,
(B) any annuity contract described in section
403(b), and
(C) the Thrift Savings Fund (within the
meaning of subchapter III of chapter 84 of
title 5, United States Code).
(w) Exemption of Churches and Qualified Church-Controlled
Organizations.--
(1) General rule.--Any church or qualified church-
controlled organization (as defined in paragraph (3))
may make an election within the time period described
in paragraph (2), in accordance with such procedures as
the Secretary determines to be appropriate, that
services performed in the employ of such church or
organization shall be excluded from employment for
purposes of title II of the Social Security Act and
this chapter. An election may be made under this
subsection only if the church or qualified church-
controlled organization states that such church or
organization is opposed for religious reasons to the
payment of the tax imposed under section 3111.
(2) Timing and duration of election.--An election
under this subsection must be made prior to the first
date, more than 90 days after July 18, 1984, on which a
quarterly employment tax return for the tax imposed
under section 3111 is due, or would be due but for the
election, from such church or organization. An election
under this subsection shall apply to current and future
employees, and shall apply to service performed after
December 31, 1983. The election may be revoked by the
church or organization under regulations prescribed by
the Secretary. The election shall be revoked by the
Secretary if such church or organization fails to
furnish the information required under section 6051 to
the Secretary for a period of 2 years or more with
respect to remuneration paid for such services by such
church or organization, and, upon request by the
Secretary, fails to furnish all such previously
unfurnished information for the period covered by the
election. Any revocation under the preceding sentence
shall apply retroactively to the beginning of the 2-
year period for which the information was not
furnished.
(3) Definitions.--
(A) For purposes of this subsection, the term
``church'' means a church, a convention or
association of churches, or an elementary or
secondary school which is controlled, operated,
or principally supported by a church or by a
convention or association of churches.
(B) For purposes of this subsection, the term
``qualified church-controlled organization''
means any church-controlled tax-exempt
organization described in section 501(c)(3),
other than an organization which--
(i) offers goods, services, or
facilities for sale, other than on an
incidental basis, to the general
public, other than goods, services, or
facilities which are sold at a nominal
charge which is substantially less than
the cost of providing such goods,
services, or facilities; and
(ii) normally receives more than 25
percent of its support from either (I)
governmental sources, or (II) receipts
from admissions, sales of merchandise,
performance of services, or furnishing
of facilities, in activities which are
not unrelated trades or businesses, or
both.
(x) Applicable Dollar Threshold.--For purposes of subsection
(a)(7)(B), the term ``applicable dollar threshold'' means
$1,000. In the case of calendar years after 1995, the
Commissioner of Social Security shall adjust such $1,000 amount
at the same time and in the same manner as under section
215(a)(1)(B)(ii) of the Social Security Act with respect to the
amounts referred to in section 215(a)(1)(B)(i) of such Act,
except that, for purposes of this paragraph, 1993 shall be
substituted for the calendar year referred to in section
215(a)(1)(B)(ii)(II) of such Act. If any amount as adjusted
under the preceding sentence is not a multiple of $100, such
amount shall be rounded to the next lowest multiple of $100.
(y) Service in the Employ of International Organizations by
Certain Transferred Federal Employees.--
(1) In general.--For purposes of this chapter,
service performed in the employ of an international
organization by an individual pursuant to a transfer of
such individual to such international organization
pursuant to section 3582 of title 5, United States
Code, shall constitute ``employment'' if--
(A) immediately before such transfer, such
individual performed service with a Federal
agency which constituted ``employment'' under
subsection (b) for purposes of the taxes
imposed by sections 3101(a) and 3111(a), and
(B) such individual would be entitled, upon
separation from such international organization
and proper application, to reemployment with
such Federal agency under such section 3582.
(2) Definitions.--For purposes of this subsection--
(A) Federal agency.--The term ``Federal
agency'' means an agency, as defined in section
3581(1) of title 5, United States Code.
(B) International organization.--The term
``international organization'' has the meaning
provided such term by section 3581(3) of title
5, United States Code.
(z) Treatment of Certain Foreign Persons as American
Employers.--
(1) In general.--If any employee of a foreign person
is performing services in connection with a contract
between the United States Government (or any
instrumentality thereof) and any member of any
domestically controlled group of entities which
includes such foreign person, such foreign person shall
be treated for purposes of this chapter as an American
employer with respect to such services performed by
such employee.
(2) Domestically controlled group of entities.--For
purposes of this subsection--
(A) In general.--The term ``domestically
controlled group of entities'' means a
controlled group of entities the common parent
of which is a domestic corporation.
(B) Controlled group of entities.--The term
``controlled group of entities'' means a
controlled group of corporations as defined in
section 1563(a)(1), except that--
(i) ``more than 50 percent'' shall be
substituted for ``at least 80 percent''
each place it appears therein, and
(ii) the determination shall be made
without regard to subsections (a)(4)
and (b)(2) of section 1563.
A partnership or any other entity (other than a
corporation) shall be treated as a member of a
controlled group of entities if such entity is
controlled (within the meaning of section
954(d)(3)) by members of such group (including
any entity treated as a member of such group by
reason of this sentence).
(3) Liability of common parent.--In the case of a
foreign person who is a member of any domestically
controlled group of entities, the common parent of such
group shall be jointly and severally liable for any tax
under this chapter for which such foreign person is
liable by reason of this subsection, and for any
penalty imposed on such person by this title with
respect to any failure to pay such tax or to file any
return or statement with respect to such tax or wages
subject to such tax. No deduction shall be allowed
under this title for any liability imposed by the
preceding sentence.
(4) Provisions preventing double taxation.--
(A) Agreements.--Paragraph (1) shall not
apply to any services which are covered by an
agreement under subsection (l).
(B) Equivalent foreign taxation.--Paragraph
(1) shall not apply to any services if the
employer establishes to the satisfaction of the
Secretary that the remuneration paid by such
employer for such services is subject to a tax
imposed by a foreign country which is
substantially equivalent to the taxes imposed
by this chapter.
(5) Cross reference.--For relief from taxes in cases
covered by certain international agreements, see
sections 3101(c) and 3111(c).
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